Phil Caggiano

A pre-approval letter from your lender basically states that you have the financial ability to purchase a home at a specific price. For a pre-approval, you'll need to provide some financial data that can later be verified and validated.

That will likely include the following:

• Income (all sources)
• Assets
• Employment Information
• Satisfactory credit score
• Additional information may be needed

Here are some items you'll need to gather before applying for a mortgage. This will speed up the process but is not required before early disclosures, including the Loan Estimate, which are provided to you by PenFed:

• W-2 statements for all borrowers (for the last two years)
• Complete bank statement for all accounts (for two months minimum)
• Any investment account data, including 401k statements and retirement accounts
• Recent pay stubs (for two months)
• A copy of the home purchase sales agreement (signed by all parties)
• Additional information may be needed, especially if self-employed

After applying for a loan and having your offer accepted on a home, you'll want to keep an eye on interest rates. Doing that will help you estimate when the best time to lock in your rate with PenFed. Locking in your rate means that you and your lender agree on your final interest rate. Your lender will lock the rate and hold that rate for a specific amount of time (usually 30 to 45 days). Now your interest rate is set. Even if rates go up or down before closing, yours will stay the same through the expiration date of your lock.

Your lender delivers a loan estimate to you within three business days of your application. It supplies you with information about your mortgage including:

• Projected monthly payment showing principal, interest, taxes, insurance, and any other assessments
• Interest rate, discount points if used, and all loan costs like application and underwriting fees
• Whether your loan has a prepayment penalty
• Any needed services like appraisals, home inspections, pest inspections, etc.
• Estimated closing costs and cash needed at the time of closing

The purpose of an appraisal is to determine the home’s value so the lender knows the property’s worth. A trained appraiser is an unbiased third-party. It’s their job to understand the real estate in a particular area and how yours compares. The lender orders the appraisal and uses it to justify the amount of money lent for the home. Depending on the loan amount and the property, more than one appraisal may be required.

Home inspections are different from appraisals. A licensed inspector does a thorough examination of all the workings of the home. The inspector will likely review items like the age and condition of the roof, appliances, heating and air conditioning, windows, plumbing, and more. The inspection report will list out any deficiencies and repairs needed.

Underwriting is the process of verifying your loan file and property details to justify approving your mortgage. During this process, the underwriter may ask you to supply additional supporting documents. Here are some of the items the underwriter reviews:

• Application information
• Credit score
• Appraisal
• Employment history
• Income and asset validation
• Cash available to close

Closing Disclosure

A Closing Disclosure supplies the detailed and expected final information concerning the costs and terms of the mortgage loan you’ve selected. This document is to be delivered to you within three days of closing so that you completely understand all of the financial requirements and closing costs.

Closing on Your Home

The day of closing is an exciting time! You should have your signature hand well-rested as there are many papers to sign. Also, you'll need to bring the necessary funds (wire, certified check or cashier’s check) listed on your closing disclosure. Once the documents have been signed and notarized, you’ll get your keys. Now life in your new home begins.