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You vs. Your Lender

So, you’re excited for your new kitchen? Me, too! But you know who isn’t nearly as excited? The lender lending you the money to complete your project. This is because you and your lender have somewhat different objectives. You are focused on getting money to fund your dream kitchen. The lender, however, wants to make money off of you (and your dream kitchen) by charging you interest on your loan.

All the good, warm, fuzzy feelings that come with improving your home and quality of life may go right out the window when you apply for a loan or walk into the bank. That’s because lenders are concerned with facts, not feelings.

In a nutshell, here’s how it works:

You’ll fill out a loan application in person or online, providing a seemingly endless amount of information about your income, assets, and expenses.

Once your application is received, a loan consultant will shepherd you through the process, letting you know what additional documentation you need to provide and what you need to sign.

This should include a Good Faith Estimate that lets you know closing costs and other fees related to disbursing your loan, and a Truth-in-Lending Disclosure that spells out the terms, costs, charges, the loan’s annual percentage rates, and your payment schedule.

Review every word of these documents. They are the contract you are agreeing to enter into with the lender. If you feel you cannot meet the requirements as set forth in these documents, do not proceed!

Once your documentation is completed and signed, they’ll be turned in for underwriting to verify the information you provided is correct. At this point, a professional appraiser will be retained to appraise the property. You want the appraisal to come in at or above what you’re paying (or paid) for the house.  Assuming everything looks good so far, you’ll be guided through other necessary steps, like obtaining title insurance and flood certification.

Once all that information is reviewed (again), the lender will make sure the title to the property is clear and make sure your homeowner’s insurance sufficiently covers the property. Then you’ll sign on the dotted line at a closing appointment, where you’ll pay closing costs and, if you’re buying the home, your down payment.

It’s a complicated process, but remember this: you have the right to understand and review everything, every step of the way. If you run across any discrepancies or errors, bring them to the attention of your loan consultant now not later.