Home Purchase Timeline

Feb 10, 2005 4:26 PM

During the Closing Process...

• The actual closing will take place at a mutually agreed time and location. Generally, the closing is held at the office of the lender’s attorney. The parties at the closing will be you, the seller(s), the seller’s attorney, your attorney and the lender’s attorney/closing agent.

• The closing agent will have received closing instructions from the lender on how the loan is to be documented and how funds will be disbursed. The closing agent will also have collected all necessary information and documentation from you, the buyer(s), seller(s) and the lender. All necessary papers are signed and recorded.

• Bring a certified check for the closing costs, including the balance of the down payment. You will be told the exact amount a day or two prior to the closing from the lender or the closing agent. Remember, you are going to need the funds for closing to be available so if you are selling assets to raise the down payment, do it in plenty of time.

• Bring your checkbook. You may have to write checks for miscellaneous amounts, such as for the value of the fuel oil left in the house’s tank.

Attachment 1

Depending on the lender’s guidelines, the determination of whether a borrower qualifies for the loan amount and term is based on his/her ability to carry the housing expense of the financed property and total debt, as expressed in ratios.

• Housing Expense includes:
  • Mortgage Principal.
  • Mortgage Interest.
  • Property Tax.
  • Insurance - on the house.
  • Mortgage insurance premium (if applicable).
  • Common charges (for condominiums and cooperatives).
  • Other expenses tied with subject property, with the exception of utilities.
• Total Debt
  • Total of housing expense.
  • Credit cards.
  • Mortgage payments of homes already owned by borrower (if applicable).
  • Housing expenses of current homes owned, if not included in mortgage payments.
  • Auto loans.
  • Installment loans. (Typically, installments with less than 10 payments are excluded)
  • Child support/alimony payments.
  • Other recurring debts.

Remember: Conventional lenders usually allow a housing expense of 28 percent of the gross income, and a total debt of 36 percent of the gross income, which is how they arrive at the 28/36 ratio. FHA loans have qualifying ratios of 29/41. Depending on the maximum your lender allows, simply multiply your gross income by the qualifying percentages and this will determine the maximum housing expense and total debt which you are able to carry.

Income qualification for housing expense: Gross Income x Housing Expense percentage allowed.

Income qualification for total debt: Gross Income x Total Debt percentage allowed.