Complete the Loan Process, Appraisal and Approval

At this stage, much of the process of home buying moves to the arena of the Lender and will likely take several weeks.  As the Buyer, you will be in frequent contact with your chosen Lender, as they request documentation from you to support and create the loan package that will be moved through their internal procedures.  During this time, the Lender will request an appraisal of the property, to be certain that its market value equals or exceeds the amount that you are requesting for your mortgage.

If the home “does not appraise”, your Lender will only agree to loan you the actual appraised value of the property.  When this occurs, there may be another round of negotiation with the Seller, or the transaction may be terminated by you as the Buyer.    Because this situation is not uncommon, it is crucial that your Agent has included the Appraisal Contingency in your original Agreement of Sale documents when initially negotiating with the Seller’s Agent.  This Appraisal Contingency allows you to bow out of the transaction and to recover your hand money, if the home does not appraise for the agreed-upon amount.  Hopefully, the home appraisal indicates that the home’s market value is at least the agreed-upon price(minus your downpayment) and the Lender will move forward to finalize the loan approval.

A least three days prior to your scheduled closing, you will be provided with a Closing Disclosure, also known as a CD, which provides a detailed breakdown of your financial obligations for the closing. It is a legal document detailing each fee associated with the mortgage that you are going to receive.  At this time, your Lender will send a copy of the CD to the Title Company, so that they can generate the Settlement Statement, or ALTA, which is a complete listing of all fees, payments and financial obligations for both the Buyer and Seller to meet at the closing.  The document will also disclose the amount of money required to complete the transaction on the day of the closing.