Real Estate Loans

Paper Work / Documentation

Learning what documents are needed can help a consumer reach approval of loan faster than the uninformed customer .

 

PROMISSORY NOTE :

Promissory note between the lender and the borrower to secure the terms of loan.

 
The documentation in a promissory note  identifies:
  • the names of the lender, borrower and any other parties involved
  • the type of loan the lender is loaning out 
  • the terms of the loan, such as who must pay what, how much the person must pay 
  • the time frame within which the person must repay the loan
  • the interest rate that must be paid in addition to the loan
  • the clauses, such as an acceleration clause, which nullifies the agreement if the borrower misses a scheduled payment

MORTGAGE OR DEED OF TRUST

This documentation entitles the lender with protection in the event that the borrower goes bankrupt or defaults on the real estate loan. It contains three parties; the trustor or borrower, the trustee (which is the entity that holds legal title) and the beneficiary (which is the financial institution loaning the money).

Mortgage affidavit states:

  • the borrower's intentions for the home
  • whether or not she will live there 
  • whether it is her primary residence.
  • whether the property is in a special flood hazard area. 
  • this document also verifies  that borrower's financial situation has not changed in any way nor has the property changed significantly.

SUBORDINATION AGREEMENT

The subordination agreement is a written contract which states that the lender agrees to subordinate the loan to a new loan. This means that in the event of foreclosure, this loan would be paid off first before any other loans or liens against the property, including any second mortgages or loans placed on the property after the inception of the original loan
In this document  the borrower testifies he/she is not involved in a divorce, bankruptcy or any other major event that could jeopardize the approval of the loan in any way. 

 
Borrower's Affidivit:
The borrower certifies that he/she has not done anything to affect the title of the property.

Pre opproval on a mortgage loan

Preopproval on a mortgage loan expedites the task of securing a loan.. Pre opproval on a mortgage loan states that a lender has confidently confirmed a borrower's income, credit score and real estate check. It increases the speed with which a loan becomes approved. Learning what documents are needed can help a consumer reach pre-approval faster than the uninformed customer .
The initial phase of a loan approval requires the borrower to provide documentation that supports and confirms the information provided on the loan application. These documents include: pay check stubs, W2 forms,  tax returns,the documents that support additional income, such as 1099 forms and leases; current mortgage paperwork, if applicable, and real estate tax documents.If an applicant produces estimated market value of his property,it allows the lender to quickly get him pre-approved.

Secured Loans

Loans against property is one of the common ways to raise money. The property is kept as collateral and if the borrower fails to repay the loan, the bank or financial institution can possess the property. Secured loans are for longer duration and with lower interest rates. Unsecured loans have no property, no collateral attached, but have a higher interest rate. 
Tips:

In order to get a loan, check with the financial institution if you're eligible for one. Common eligibility criteria for secured loans against property include information about your income, saving, debts along with the cost of property mortgaged, your credit history and your payment track- record.

  • If you meet the eligibility requirements, send in your application. The bank goes through your application, reviews the information and determines if it's is approved or not. If approved for secured loans, they further settle on an interest rate and duration.
  • Send in applications or talk to authorized personnel of other institutions for the best interest rate. Don't settle with the first bank you apply to.
  • If denied , look for other lending solutions. Be careful of scammers and look for legitimate lenders.