Week 4 – Step 3 Initial Disclosures

 

Congratulations, your offer has been accepted! They asked for some money, you offered them some money, now you get a home. Is that too much of an over simplification? I would think so.

When you submit an offer on a home, what you are actually doing is entering a contract. Once the terms of the contract are agreed upon, the offer is signed off on and we award the status of the purchase with the turn of phrase, “Offer Accepted.” Quite possibly the largest term you are agree to in the contract is the amount of money you will pay to own the home. This might seem obvious, but he more you examine this seemingly simple term, it becomes more and more complicated.

An important thing to remember is although the sales contract of the home and the financing to buy the home are related, the documents are completely separate.

It goes like this, you are pre-approved with a lender at a specific rate up to a specific dollar amount. This allows you to make legitimate offers on homes within your price range. Once the offer is accepted, and a certain dollar amount is agreed upon, we draw up the terms for a loan amount that combined with the amount of your down payment, equal the purchase price of the home.

This separate document, detailing the terms of the loan, is referred to as your Initial Disclosures. This is the first time you see, in great detail, all the costs associated with the loan, as well as the exact terms of the loan. These disclosures are a big deal and a huge step, because after you sign these disclosures they are sent to the lender for initial review. It is at this review, where everything is examined with a fine tooth comb. Where no financial stone goes unturned, where dreams are about to be made, where the lender examines, and confirms your ability as well as your competency to repay the debt. It is this review, which leads us to the next step. It is this step that brings us to your Conditional Loan Approval…