Now that your lender has received your appraisal report, they can begin underwriting your file. The underwriter will make the ultimate decision of whether or not the loan is accepted or denied. They will verify all documentation submitted by the processing department and make sure the information meets the loan program guidelines. If there are any deficiencies, they will ask for additional documentation to remedy them. Once they’re comfortable that all guidelines and criteria have been met, a final commitment will be issued along with the final rate-locked Good Faith Estimate. Signing the Commitment It is now time to sign the final commitment. The commitment is a contract that is usually sent to all parties involved in the transaction including realtors and attorneys. Once you sign the commitment, you have accepted the conditions in the contract and your mortgage has been completed. At this point, both you and the bank are obligated to fulfill all the terms of the mortgage and failing to do so will put your down payment and other prepaid fees at risk. Now that the commitment is signed and executed, all parties are notified and you are now ready to work on closing.
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What is Title Insurance? Title insurance is usually required by the lender to protect against loss resulting from claims by others against your new home. In some states, attorneys offer title insurance as part of their services in examining title and providing a title opinion. In other states, a title insurance company or title agent directly provides the title insurance. To save money on title insurance, compare rates among various title insurance companies. Under RESPA, the seller may not require you, as a condition of the sale, to purchase title insurance from any particular title company. Generally, your lender will require title insurance from a company that is acceptable, and in most cases you can shop for and choose a company that meets the lenders standards and save significant money on closing fees. Ask what services and limitations on coverage are provided under each policy so that you can decide whether coverage purchased at a higher rate may be better for your needs. However, in many states, title insurance premium rates are established by the state and may not be negotiable. If you are buying a home that has changed hands within the last several years, ask your title company about a "reissue rate," which would be cheaper. If you are buying a newly constructed home, make certain your title insurance covers claims by contractors. These claims are known as "mechanics liens" in some parts of the country. A way to compare title insurance quotes to see where you can save money is to look at the Good Faith Estimate. A Good Faith Estimate is (GFE) is not just full of “mandatory” charges by the bank. If you look at a GFE, you will see there are also Title Insurance charges on it. These charges, unlike popular belief, are not mandatory charges. In fact, nearly almost every charge on your GFE are all estimates, hence the name Good Faith Estimate. Here is a link to what the standard GFE looks like blank: http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf.
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We will be beginning Part 4 discussing one of the most important of the sections on page 1 of the Good Faith Estimate (GFE): the SUMMARY OF YOUR LOAN. We will discuss this sections and how they relate to a purchase and a refinance transaction.
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In this article, we will be discussing what a Good Faith Estimate is (GFE), who provides it and what it means. The average person does not know what a GFE is and too often think that they are “mandatory” charges by the bank. If you look at a GFE, you will see there are also Title Insurance charges on it. These charges, unlike popular belief, are not mandatory charges. In fact, nearly almost every charge on your GFE are all estimates, hence the name Good Faith Estimate.
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Shopping for title insurance may seem like a tricky and complicated subject. It is not all that hard though. In fact, Title insurance shopping can be compared to grocery shopping. You want to find the best product for the lowest amount. Now just because a place like Costco, Sam’s club or even BJ’s might have a cheaper product does not mean the quality of the product has been compromised. In fact, the product has all the same packaging, information, writing and even the same quality product inside; the only difference is the price and quality of how the customer is treated.
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For the next set of definitions, we will be discussing common real estate and closing terms beginning with the letter Q to the letter Z. This is the final part of a three part informational blog about title insurance and common terms used in the title insurance, real estate and the closing process. I hope that everyone who has took the time to read these definitions and articles are better informed and have a better understanding of what is going on in their title insurance transactions, real estate transactions and closing transactions.
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