Loan and Credit

During: Buying Process Overview: Contract to Close: Loan and Credit

Contract to Close

The following is a visual representation of the Loan and Credit process when buying homes as a Nomad. It is part of the Contact to Close process that you’d use once you are under contract to buy a property.

1. Complete "Contract To Close" checklist
   Complete the "Contract To Close" checklist:

   https://RealEstateFinancialPlanner.com/contract-to-close/

   Buying Process OverviewContract To CloseDuring ChecklistsUltimate Nomad ChecklistWeek 8

2. Class Watch "Contract to Close" Recording of Live Class
   Watch the recording of the live presentation of "Contract to Close" available on:

   https://RealEstateFinancialPlanner.com/contract-to-close/

   ClassesContract To CloseUltimate Nomad ChecklistWeek 60Week 8

3. Complete "Contract To Close: General" checklist
   Complete "Contract To Close: General" checklist:

   https://RealEstateFinancialPlanner.com/general/

   Contract To CloseContract To Close: GeneralUltimate Nomad ChecklistWeek 13

4. Complete "Contract To Close: Title" checklist
   Complete the "Contract To Close: Title" checklist:

   https://RealEstateFinancialPlanner.com/title/

   Contract To CloseContract To Close: TitleUltimate Nomad ChecklistWeek 13

5. Complete "Contract To Close: Owner’s Association" checklist
   Complete the "Contract To Close: Owner’s Association" checklist:

   https://RealEstateFinancialPlanner.com/owners-association/

   Contract To CloseContract To Close: Owner's AssociationUltimate Nomad ChecklistWeek 13

6. Complete "Contract To Close: Seller's Property Disclosure" checklist
   Complete the "Contract To Close: Seller's Property Disclosure" checklist:

   https://RealEstateFinancialPlanner.com/sellers-property-disclosure/

   Since the "Seller's Property Disclosure" is often provided even before we write the offer, it is not uncommon that we use "Completed" for the date of this deadline. However, if we have not received the "Seller's Property Disclosure" prior to writing the offer, we often use "MEC + 3 Days" so that you can ideally get a copy of the "Seller's Property Disclosure" prior to your inspection.

   This is especially important since there is not an objection for the "Seller's Property Disclosure"; you'd need to object based on your inspection if you found something at the property that you learned about via the "Seller's Property Disclosure".

   Contract Deadline: Seller's Property Disclosure DeadlineContract To CloseContract To Close: Seller's Property DisclosureSellers Property DisclosureUltimate Nomad ChecklistWeek 13

7. Complete "Contract To Close: Loan and Credit" checklist
   Complete the "Contract To Close: Loan and Credit" checklist:

   https://RealEstateFinancialPlanner.com/loan-and-credit/

   Contract To CloseContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 13

8. Complete "Contract To Close: Appraisal" checklist
   Complete the "Contract To Close: Appraisal" checklist:

   https://RealEstateFinancialPlanner.com/appraisal/

   Contract To CloseContract To Close: AppraisalUltimate Nomad ChecklistWeek 13

9. Complete "Contract To Close: Survey" checklist
   Complete the "Contract To Close: Survey" checklist:

   https://RealEstateFinancialPlanner.com/survey/

   Contract To CloseContract To Close: SurveyUltimate Nomad ChecklistWeek 13

10. Complete "Contract To Close: Inspection and Due Diligence" checklist
    Complete the "Contract To Close: Inspection and Due Diligence" checklist:

    https://RealEstateFinancialPlanner.com/inspection-and-due-diligence/

    Contract To CloseContract To Close: Inspection and Due DiligenceUltimate Nomad ChecklistWeek 13

11. Complete "Contract To Close: Closing and Possession" checklist
    Complete the "Contract To Close: Closing and Possession" checklist:

    https://RealEstateFinancialPlanner.com/closing-and-possession/

    Contract To CloseContract To Close: Closing and PossessionUltimate Nomad ChecklistWeek 13

Contract to Close:
Loan and Credit

And, here is the visual representation of the Loan and Credit process.

Let’s look at each step in more detail.

Loan Application Deadline

The Loan Application Deadline is the deadline for buyer having a completed loan application. This is usually completed very early in the process (within a day of going under contract).

1. Complete "Loan Application Deadline" checklist
   Complete the "Loan Application Deadline" checklist:

   https://RealEstateFinancialPlanner.com/loan-application-deadline/

   You'll usually apply for the loan prior to going out and looking at homes with your Real Estate Broker. However, your Lender will require an address to have a completed loan application. For the "Contract to Buy and Sell Real Estate" we typically use "MEC + 2 Business Days" to get your Lender a full, complete with address of the property, application.

   Contract Deadline: Loan Application DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 13

2. If you haven't already selected a Lender, ask Real Estate Broker for list of possible Lenders
   If you haven't already selected a Lender (which in most cases you will have at this point), then ask your Real Estate Broker to suggest 3 possible Lenders to contact for financing your home purchase based on the types of loans you're considering.

   You're welcome to use whichever Lender you choose (from the Real Estate Broker's recommendations or your own), however... you should realize that making sure your Lender performs if your responsibility.

   In other words, if your Lender does not show up on the day of closing with the money for whatever reason, you are still in default on the "Contract to Buy and Sell Real Estate" (not your Lender) and you are at risk of losing your Earnest Money (and specific performance in the unlikely event that box is checked on the "Contract to Buy and Sell Real Estate"). Another way of saying this is: your Lender is not a party to the "Contract to Buy and Sell Real Estate" and so they have no consequences in the "Contract to Buy and Sell Real Estate" if they don't perform.

   So, consider "testing" a new Lender carefully.

   ASAPContract Deadline: Loan Application DeadlineDream TeamDream Team - Pre-ClosingFinancingUltimate Nomad ChecklistWeek 2

3. If you have not already done so, interview 3 Lenders
   If you have not already done so, talk to 3 Lenders to determine which one you'd like to use.

   Ask your Real Estate Broker for recommendations.

   Mark complete once you've talked to 3 Lenders of if you've already decided which Lender you plan to use.

   ASAPContract Deadline: Loan Application DeadlineDream TeamDream Team - Pre-ClosingFinancingUltimate Nomad ChecklistWeek 2

4. If you have not done so already, determine your Lender
   Decide which Lender you will use to finance your purchase.

   You can ask your Real Estate Broker for recommendations.

   Mark this task complete once you've decided on a Lender to use.

   Analyzing DealsASAPContract Deadline: Loan Application DeadlineDream TeamDream Team - Pre-ClosingFinancingUltimate Nomad ChecklistWeek 2

5. If you have not done so already, apply for loan with Lender
   Make an application to get qualified for a loan with the Lender you've decided you're going to use.

   Some people will opt to get quotes from multiple lenders. If you're going to do this, compare everyone on the same day so the rate is the same.

   Also, have the Lender you think is most likely to be the one you'll go with pull your credit and then tell the other Lenders you're comparing what your credit score is. If you decide to go with them, you'll let them pull your credit then.

   If you need a recommendation for a Lender ask your Real Estate Broker.

   Mark this task complete once you've applied for a loan and been approved with the Lender you plan to use.

   ASAPContract Deadline: Loan Application DeadlineFinancingUltimate Nomad ChecklistWeek 2Week 54

6. If you haven't done so alreayd, send copy of "Contract to Buy and Sell Real Estate" to your Lender
   As soon as your "Contract to Buy and Sell Real Estate" is accepted, make sure your Lender has a copy so they can complete your application and start working on getting your financing approved and through under-writing.

   ASAPContract Deadline: Loan Application DeadlineFinancingUltimate Nomad ChecklistWeek 2Week 54

7. Complete loan application with Lender
   Once you have an accepted offer, you'll need to complete the loan application with your Lender.

   Contract Deadline: Loan Application DeadlineFinancingUltimate Nomad ChecklistWeek 9

8. Pay Lender for Appraisal
   Pay your Lender for Appraisal so they can order it.

   Contract Deadline: Loan Application DeadlineFinancingUltimate Nomad ChecklistWeek 9

9. If you haven't done so already, pay Lender for Appraisal
   If you have not already done so, pay your Lender for Appraisal so they can order it.

   Contract Deadline: Appraisal DeadlineContract Deadline: Loan Application DeadlineFinancingUltimate Nomad ChecklistWeek 9

Verify with lender that you’re going to be using 100% of your Seller Concessions at the time you apply for the loan.

Loan Objection Deadline

The Loan Objection Deadline is the deadline for buyer objecting to the loan.

1. Complete "Loan Objection Deadline" checklist
   Complete the "Loan Objection Deadline" checklist:

   https://RealEstateFinancialPlanner.com/loan-objection-deadline/

   Contract Deadline: Loan Objection DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. Provide Lender all financial documents
   Your Lender will undoubtedly want a plethora of financial documents.

   Mark this task complete once you've provided them all to your Lender.

   Contract Deadline: Loan Objection DeadlineFinancingUltimate Nomad ChecklistWeek 9

3. Consider ARM versus fixed-rate mortgages
   In all but a small number of cases, we recommend fixed-rate 30 year mortgages for Nomads.

   However, there are two situations we'd consider ARMs.

   First, if you're buying the property and are 100% positive you're going to be putting a Tenant-Buyer in the property and you will be out of the property before the mortgage will adjust, then you can consider using an ARM.

   Second, if you're buying the property with partners and the only loan you can get with the partnership is an ARM then you can also consider an ARM. However, in this case you probably should be putting a Tenant-Buyer in the property so it probably still falls under the first reason above.

   Interest rates for ARMs (Adjustable Rate Mortgages) tend to be a little lower than the interest rates on fixed-rate 30 year mortgages. But the ARM interest rates can adjust over time causing much higher monthly payments and significant negative cash flow after the interest rate adjusts. This adds additional risk that you could have opted not to take on.

   Mark this task as complete if you have decided to get fixed-rate mortgage or an ARM.

   Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineFinancingNet Operating IncomeOptionalTenant-BuyersUltimate Nomad ChecklistWeek 10

4. Discuss monthly PMI versus up-front PMI with Lender
   Often for Nomads it is better to pay a one-time up front PMI (Private Mortgage Insurance) payment instead of monthly PMI on their loans.

   This may mean coming to Closing with a little more cash.

   Sometimes it means voluntarily raising your interest rate with your Lender to get a credit to pay for some or all of the up-front PMI.

   Discuss these two scenarios with your Lender to see which one makes more sense to you.

   Mark this task complete once you've discussed this with your Lender and decided which you'll pick.

   Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineFinancingInterest RateNet Operating IncomeOptionalPrivate Mortgage InsuranceUltimate Nomad ChecklistWeek 10

5. Consider buying down interest rate
   Talk to your Lender to see if buying down your interest rate makes sense in your specific situation.

   Sometimes, especially if you have extra cash and you plan to hold the property for a long time, it makes sense to pay additional points to get a lower interest rate.

   Mark this task complete once you've talked to your Lender about these options, analyzed them yourself and decided to buy down your interest rate or not.

   Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineFinancingInterest RateNet Operating IncomeOptionalUltimate Nomad ChecklistWeek 10

6. Consider increasing down payment
   Sometimes if you have extra cash for down payment it might make sense to increase down payment.

   We often consider this as an alternative to to paying up-front PMI or buying down the interest rate. If we're putting less than 20% down, one way to lower our monthly payment is to put more down to get rid of PMI instead of paying the PMI up-front.

   Mark this task as complete when you've talked to your Lender about using a larger down payment and decided whether you will or not.

   Analyzing DealsCash FlowContract Deadline: Loan Objection DeadlineDown PaymentFinancingInterest RateNet Operating IncomeOptionalUltimate Nomad ChecklistWeek 10

Verify with lender that you’re going to be using 100% of your Seller Concessions just prior to your Loan Objection Deadline. It is easier to change it now then when you’re reviewing the Closing Disclosure heading to closing.
Review Closing Disclosure with Closing Disclosure Checklist.

Buyer’s Credit Information Deadline

The Buyer’s Credit Information Deadline is the deadline for buyer providing their credit information to the Seller.

1. Complete "Buyer’s Credit Information Deadline" checklist
   Complete the "Buyer’s Credit Information Deadline" checklist:

   https://RealEstateFinancialPlanner.com/buyers-credit-information-deadline/

   Contract Deadline: Buyer's Credit Information DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. IF OWNER FINANCING: Hire Attorney to help
   If you're getting Owner Financing (also known as Seller Financing) please hire an Attorney to get help. Your Real Estate Broker is not qualified, trained or allowed to assist with Owner Financing.

   Contract Deadline: Buyer's Credit Information DeadlineContract To Close: Loan and CreditFinancingOwner FinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

Disapproval of Buyer’s Credit Information Deadline

The Disapproval of Buyer’s Credit Information Deadline is the deadline for seller to disapprove buyer’s credit.

1. Complete "Disapproval of Buyer’s Credit Information Deadline" checklist
   Complete the "Disapproval of Buyer’s Credit Information Deadline" checklist:

   https://RealEstateFinancialPlanner.com/disapproval-of-buyers-credit-information-deadline/

   Contract Deadline: Disapproval of Buyer's Credit Information DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. IF OWNER FINANCING: Hire Attorney to help
   If you're getting Owner Financing (also known as Seller Financing) please hire an Attorney to get help. Your Real Estate Broker is not qualified, trained or allowed to assist with Owner Financing.

   Contract Deadline: Disapproval of Buyer's Credit Information DeadlineContract To Close: Loan and CreditFinancingOwner FinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

Existing Loan Documents Deadline

The Existing Loan Documents Deadline is the deadline for seller to provide any loans that will remain in place with the sale.

1. Complete "Existing Loan Documents Deadline" checklist
   Complete the "Existing Loan Documents Deadline" checklist:

   https://RealEstateFinancialPlanner.com/existing-loan-documents-deadline/

   Contract Deadline: Existing Loan Documents DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. IF EXISTING LOAN REMAINING IN PLACE AFTER SALE: Hire Attorney to help
   If you're buying a property and the Seller's loan is remaining in place after the sale (also known as buying a property Subject To the existing financing) please hire an Attorney to get help. Your Real Estate Broker is not qualified, trained or allowed to assist with these types of transactions.

   Contract Deadline: Existing Loan Documents DeadlineContract To Close: Loan and CreditFinancingOwner FinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

Existing Loan Documents Objection Deadline

The Existing Loan Documents Objection Deadline is the deadline for buyer to object to anything in any of the loans that will remain in place with the sale.

1. Complete "Existing Loan Documents Objection Deadline" checklist
   Complete the "Existing Loan Documents Objection Deadline" checklist:

   https://RealEstateFinancialPlanner.com/existing-loan-documents-objection-deadline/

   Contract Deadline: Existing Loan Documents Objection DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. IF EXISTING LOAN REMAINING IN PLACE AFTER SALE: Hire Attorney to help
   If you're buying a property and the Seller's loan is remaining in place after the sale (also known as buying a property Subject To the existing financing or assuming the loan) please hire an Attorney to get help. Your Real Estate Broker is not qualified, trained or allowed to assist with these types of transactions.

   Contract Deadline: Existing Loan Documents Objection DeadlineContract To Close: Loan and CreditFinancingOwner FinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

Loan Transfer Approval Deadline

The Loan Transfer Approval Deadline is the deadline for getting approval to transfer any existing loans from seller to buyer with the sale.

1. Complete "Loan Transfer Approval Deadline" checklist
   Complete the "Loan Transfer Approval Deadline" checklist:

   https://RealEstateFinancialPlanner.com/loan-transfer-approval-deadline/

   Contract Deadline: Loan Transfer Approval DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. IF EXISTING LOAN REMAINING IN PLACE AFTER SALE: Hire Attorney to help
   If you're buying a property and the Seller's loan is remaining in place after the sale (also known as buying a property Subject To the existing financing or assuming the loan) please hire an Attorney to get help. Your Real Estate Broker is not qualified, trained or allowed to assist with these types of transactions.

   Contract Deadline: Loan Transfer Approval DeadlineContract To Close: Loan and CreditFinancingOwner FinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

Seller or Private Financing Deadline

The Seller or Private Financing Deadline is the deadline for approving of any seller or private financing with the sale.

1. Complete "Seller or Private Financing Deadline" checklist
   Complete the "Seller or Private Financing Deadline" checklist:

   https://RealEstateFinancialPlanner.com/seller-or-private-financing-deadline/

   Contract Deadline: Seller or Private Financing DeadlineContract To Close: Loan and CreditFinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

2. IF OWNER FINANCING: Hire Attorney to help
   If you're buying a property and you are getting Owner Financing or Private Financing please hire an Attorney to get help. Your Real Estate Broker is not qualified, trained or allowed to assist with these types of transactions.

   Contract Deadline: Seller or Private Financing DeadlineContract To Close: Loan and CreditFinancingOwner FinancingUltimate Nomad ChecklistWeek 10Week 11Week 12Week 13

See the Appraisal group of Dates and Deadlines.

IMPORTANT NOTE: This checklist is based on what I personally use with clients in Northern Colorado and is based on the Colorado Real Estate Commission approved Contract to Buy and Sell Real Estate. Please rely on your local real estate agent for how it works in your local real estate market. This process will definitely vary in different States.