Quality Loan Estimates
We believe whether you are buying a home or refinancing a home, you should be able to count on the numbers put in front of you. As a lender, it’s our job to ask the right questions and learn the information necessary to deliver an accurate loan estimate early in the process. We are aware that you count on us getting this right and therefore, this is a well-developed and highly prioritized skill with any mortgage specialist at Mortgage Evolution. Keep reading below for deeper information regarding loan estimates we deliver to home buyers.
More than just a down payment
The funds required to purchase a home includes the down payment and settlement charges (closing costs). A settlement charge is the sum of title and escrow charges, prepaid items and lender fees. Depending on the loan amount and other variable, settlement charges can range from 2% to 4% of the loan amount. The good news is seller credit can be used to pay for closing cost and, additionally, many loan programs allow for lender paid closing cost structuring. Gift funds from family can also be used to pay for settlement charges. Our loan estimates will show you all the cool variations that reduce the funds you need to provide for settlement charges. Most importantly, we account for all charges in our loan estimates.
Know your real payment
Why are buyer frequently put into a state of shock deep into the loan process? Their real payment is higher (sometimes by hundreds of dollars) than initially quoted. This is unacceptable and 100% avoidable. Our loan estimates show you the real payment before placing an offer on a home so there will be no surprises. We show you the accurate interest rate, property taxes calculated to the penny, a conservative estimate of the home owner’s insurance expense, and we account for flood insurance and HOA dues where applicable. Important note: during the shopping phase, you interest rate is not locked and rate pricing fluctuates daily. All loan estimates, however, will reflect accurate current pricing at the time of delivery.
Also known as an escrow account, an impound account is an account held and managed by your lender for the purpose of paying your semi-annual property taxes and annual home owners insurance premiums as they come due. There is no cost for this account and the advantage an impound account is that it allows you to make equal monthly payments for your property taxes and home owner’s insurance, so you don’t have to come up with large lump sums three times per year. When purchasing a home, they buyer pre-funds that account with a pre-determined amount so the account always has the right amount of funds to cover these expenses. When drafting a loan estimate it is important to account for the funds required to adequately set up the impound account, and equally important to ensure the accuracy of this section as it represents a sizeable percentage of the settlement charges due at closing. s.
Prepaid charges are just that, recurring charges that you are prepaying. What are the items a buyer prepays when purchasing a home?.
- The first year’s home owner’s insurance premium (the flood insurance premium, as well, if applicable)
- The initial deposit to your impound account (described above)
- The first month’s HOA dues, if applicable
- The interest due from the day escrow closes through the end of the closing month.
Property Inspection costs
In most cases, property inspections are paid for by the buyer along the way by debit or credit card therefore it’s important to account for these expenses since they may not be displayed in the loan estimate. The two most common inspections when purchasing a home are the appraisal and home inspection. The lender is in-charge of the appraisal and the realtor is in-charge of the home inspection and any other inspection required or desired. A common inspection for properties over 10-15 years old is a pest inspection. Other less common inspections such aseptic, well, foundation, and roof are circumstantial to the property and your realtor will advise your best course of action.