A Home Inspector’s Weblog by Frank Schulte-Ladbeck

exploring homes and the lives in them around Houston

Delving into Paperwork (Part 1)- The Quest Begins

At first, I did not want to deal with financial matters on this blog, since I know they are better sites for that inquiry. About a month ago, I did a study of how a first time home buyer could obtain information about their credit for an article on my website, which made me realize that I had to improve my information about mortgages and closing if I wanted potential home buyers to have the information they needed. I also saw blogs where people were working out ideas for books through posts. I decided that I should do the same on this topic for my website.

This post is just to introduce the topic, and to remind readers in other states that I will be dealing with generalities (or at least what I believe are generalities) about mortgage paperwork and the paperwork at closing. Each state, lender, and title company will have their own rules in regards to paperwork, but the basics remain the same across the country. I will not be going into terminology or differences in mortgages types, since I already have that on my site. My goal is to prepare you for comparing different mortgage estimates, understanding some papers that you will have to sign in relation to the loan, and what kind of paperwork will come up during the closing. I have found that loan officers are good about answering questions when they arise, but you should not be ashamed to ask. This is the biggest investment that you will make, so you need to understand what it is they are saying. I have also found that your Realtor can be of great assistance to you during closing. They have been through this before, so trust them to guide you.

There are several good sites and blogs that deal with mortgages. I have a link to a blog called Almost Famous Mortgages, which has several posts explaining aspects of a loan. I found another one, which I am trying to locate again, so I can link to it. I remember a Russ from Chicago (hey, he is from my home town, he has to be good). I want to give you another perspective on this topic by giving you this link. When doing my research on credit, I found a lot of useful information on the E-loan and Credit.com sites. I had heard of them, but I had no reason to go to their sites, until I was doing my research. I have since signed up for their newsletters, which are interesting. Sometimes Realtor blogs touch on this subject.

Before we start delving into the topic proper in the next post, I wanted to mention mortgage fraud. Chris Smith has written a series of posts about mortgage fraud on his blog Equity Scout (the Real Estate Investment blog on the right). Most lenders that you will encounter are honest people trying to do their job, but there is always someone out there ready to scam you, so you should be aware of these practices. The National Association of Realtors has some brochures on fraud available at their website. There is also a site where professionals in the real estate industry report schemes that they are seeing. Mainly the information here comes from appraisers. The site is called MortgageFraudWatchList.org. Some states have been currently enacting laws to prevent some of these schemes. For example, Texas has a new law which will go into effect in the new year, that will force people who are trying to unload houses with liens on them to report this fact within seven days of the sale. You can find out about your state’s laws by going to the state website and typing in real estate or mortgages in their search engine, but you will have to do some digging. Realtors are usually up to date on many of these laws.

Take these posts as cairns along your way, and take the time to explore what others have written. I can tell you from experience that you can easily be overwhelmed, so the more you know going into this process, the better you will handle it.

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