Here are some of the key documents involved in the home-buying process.
Purchase Agreement or Sales Contract: The agreement between a buyer and seller of a piece of real estate. It describes the terms and conditions (such as the price) under which a buyer agrees to purchase the property from a seller, and may also be called an Offer or Agreement.
Form 1003 or Uniform Residential Loan Application: A document required for nearly all mortgage loan applications that includes the borrower’s income and assets as well as a description of the home for which the mortgage is being applied.
Commitment Letter: A formal letter provided by a lender to a borrower stating he or she has been approved for a mortgage loan (also referred to as an Approval Letter). It outlines the specific terms and conditions of the approved loan.
Closing Disclosure: A form that outlines the details of an approved mortgage loan, including the loan terms, projected monthly payments, and how much a borrower will pay in fees and other costs to obtain the mortgage. The lender must give the Closing Disclosure to a borrower at least three business days before they close on the loan.
Loan Estimate: A form that tells a borrower important details about a requested mortgage, including the estimated interest rate, monthly payment, and total closing costs for the loan. It also provides estimated costs of taxes and insurance, and how the interest rate and payments may change in the future, as well as any other special features of the loan. A lender must provide an applicant a Loan Estimate within three business days of receiving his or her application.
Appraisal: A report done by an appraiser that estimates the value of the property. This helps tell borrowers and lenders that the value of the property being used to secure the mortgage supports the amount of the loan. Appraisals are carried out by qualified professionals; usually, the borrower or lender must pay a fee to conduct the appraisal.
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