The lender will probably have you sign a Verification of Employment (VOE) form to verify information that you give him or her. This document will be sent to your employer to verify your employment and salary, along with a Verification of Deposit (VOD) form to verify account balances with your bank.

The lender will also run a credit check to verify the information you provide regarding your debts, so be as accurate as possible. Any discrepancies will require explanation from you, and may cause delays in the processing of your loan. If you had credit problems in the past, you will want to explain them to your lender. And you should probably file a written explanation with your loan application. If the problems have been corrected and payments made on time for the past year, your credit history probably won't prevent you from getting a loan.

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decisions, decisions...
You will need to make several important decisions when you apply for your loan, such as the kind of mortgage you would like and the amount you need to borrow. How much you need to borrow depends on the purchase price of the house and the amount of your down payment. Remember that being pre-qualified for the amount you intend to borrow is no guarantee that you'll actually get it. However, if your application shows you to be creditworthy, it is likely that you'll be approved for the pre-qualified amount.

There are also a few other decisions you will have to make at the time of application. You and your lender will set a closing date, which should occur by the proposed time of closing on the sale of the house. Also, you will be given the option to "lock in" the interest rate of your loan.

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costs
There are several costs involved in filing your loan application, such as the cost of the credit report mentioned earlier. You will also pay an application fee, which covers the lender's cost to process all your loan information, and an appraisal fee for an estimate of the value of the property you intend to buy. Sometimes this appraisal fee is included in the application fee.

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after you apply
Your lender is required by law to inform you of several things within three business days of your loan application:

1. the annual percentage rate (APR).
   This includes interest, certain closing costs, and any points and other charges on your mortgage. Since up-front costs are factored over the life of the loan, the APR will be slightly higher than the interest rate on your loan.
2. a good-faith estimate.
   This is an itemized estimate of the costs to close (or settle) the loan.
3. settlement costs.
   A HUD Guide. This government publication describes the closing process, informs you of your homeowner rights, and explains closing costs.

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closing on your home
The final step on your road to home ownership is the closing, or settlement, of the purchase transaction and mortgage loan.

You've selected a home you're happy with, agreed on a purchase price and secured a loan from your lender. You're done, right? Not quite. The closing, where the property is officially transferred to you and all remaining documents are signed, awaits. Closing can be a confusing process, especially since the details of closing, including what documents and fees are required, who conducts the meeting, and even who attends the meeting vary a great deal from state to state and from lender to lender.

A general understanding of what takes place in the transaction will help prepare you for your closing.

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set closing date
Your sales contract probably indicated an estimated date of closing, but now you're ready to set an actual time and place for the meeting to take place. Make sure the settlement will take place before the loan commitment (and any rate-lock) expires, but leave yourself time for all the necessary documentation to be assembled. Most lenders will typically need 3-5 days notice to prepare the loan papers and get them to the closing agent. If any repairs were agreed upon in the sales contract, make sure you allow enough time for them to be completed.

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additional items
Various details have to be taken care of regardless of location. These will require documentation at loan closing. Some responsibilities will fall to the seller; others will be your own. The following are usually required:

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survey
A survey showing the boundaries of the property and the location of any improvements is often required. It will also show any encroachments on the property by fences or buildings. Minor encroachments won't present a problem, but major encroachments may have to be corrected before closing can take place.

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termite inspection
This inspection is required by law in many areas of the country and is also required on all FHA and VA loans, and on many conventional loans.

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homeowner's insurance
Your lender will require that you are covered for the replacement cost of the property. You must pay for this coverage and bring the policy with you to closing.

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title insurance
All lenders require title insurance, which protects the lender and the buyer (if you wish to add yourself to the policy for a small additional premium) in case a fraud, lien or faulty title is later discovered. The insurance company will perform a title search to establish that the seller actually owns the property and that there are no claims against it.

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flood insurance
If the property is located within a flood plain, you will also need a flood insurance policy.

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water and sewer certification
If the property is not served by public water and sewer facilities, you must have certification from the local government of private water source and sanitary sewer facility.

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certificate of occupancy
If your home is new, you'll need this certificate before you can move in. The builder should obtain it for you from the city or county.

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building code compliance
Local governments often require an inspection whenever a house is sold to see that all aspects of the property conform to building codes. Repairs may be required to bring the house up to code before the sale can close. The sales contract should specify whose responsibility this will be.

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final walk-through
Within a day or so before your closing, you'll want to make a final inspection of the property on your own (or with your real estate agent) to see that any required repairs have been made, no new damage has occurred, and any items that are supposed to be sold with the house remain.

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closing costs
You received a "good faith estimate" of your closing costs from your lender within a few days of filling out your loan application. One business day before your scheduled closing, your lender is required to allow you to review your Settlement Statement, which will give the actual amount you'll need to bring with you to closing. Personal checks are seldom accepted, so you'll probably have to pay your closing costs with a certified or cashier's check. (You can use our Closing Costs Checklist to help you keep track of these expenses).

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the closing meeting
Most of the people involved with the purchase of your new home will probably be present at the closing, although there are areas of the country where an agent processes everything without a meeting. In most instances, however, your loan officer, the seller and any real estate agents or attorneys involved, will all meet together at the office of whoever is acting as the closing agent.

Several things take place at this meeting, which officially closes both your mortgage loan and the sale of your new house:

documents are examined and signed
The closing agent will review the settlement sheet with both the buyer and seller, who then jointly sign the statement. Evidence of required insurance and inspections is also presented.

any outstanding fees are paid
Once all papers are in order, you (and sometimes the seller) will pay whatever remaining points and fees are due. You will also present your down payment. The lender's check for the amount of the mortgage is also submitted to the closing agent at this time.

property is transferred
At this point, you have completed the purchase process and will be given the keys to your new home! After the meeting, the closing agent will record the mortgage and deed in your name with local government records. Once this legal transfer is complete, funds will be dispersed by the agent to the appropriate parties.

documents are handed out
You will receive a number of important documents at the closing meeting:

1. hud-1
   Settlement Sheet This is the itemized list of closing costs that your lender made available to you the day before your closing.
2. truth-in-lending statement
   You received this document a few days after applying for your loan. It is the statement which outlines the cost of your loan and gives you the APR (annual percentage rate), and also defines the terms of your loan and the amount of payments.
3. the mortgage note
   The mortgage (or promissory) note is legal evidence of your promise to repay your loan according to all agreed-upon terms. It details the amounts and dates of payments, as well as the penalties you may suffer if you fail to make these payments.
4. the mortgage
   The mortgage is the legal document which gives the lender a claim against your house if you fail to abide by the terms of the mortgage note. The mortgage restates the terms laid out in the note, and lists your responsibilities under the terms of the agreement. Remember that you have possession of the property, the lender shares ownership with you until your loan has been fully repaid, and can demand full payment of the balance of the loan or foreclose on the property if you default on your loan.
5. affidavits
   You will be given a number of other documents to sign at closing. Some are required by law; others are lender requirements. For example, your lender might have you sign an affidavit of occupancy, stating that the property will be your primary residence. Your lender will be able to explain to you any documents you are asked to sign.
6. the deed
   This is the document that transfers ownership to you. The deed will be in your name and will be signed by the seller at closing. You'll receive a copy of the deed at closing, and the original will be sent to you after it has been recorded.

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