At Torii, we try to make home buying as easy as possible by preparing you for every step of the process.
In this blog series, we’re walking you through the paperwork that you need to start the home buying process.
Let’s start with Loan Estimates. A Loan Estimate is a standardized form that tells you important details about your loan offer. The Loan Estimate shows you the terms the lender expects to offer you if you decide to move forward with your loan application.
You should be prepared to request a loan estimate before you make an offer on a home. This helps solidify your buying power and make your offer even more competitive.
To request a loan estimate, you simply need to provide:
- Your name
- Your income
- Your social security number (so the lender can check your credit)
- The address of the home you plan to purchase (if you know!)
- An estimate of the home’s value (the budget you have in mind)
- The loan amount you want to borrow (the home price minus your down payment amount)
Monthly Principal (the amount you will borrow) and interest (the lender’s charge for lending you money) make up the main components of your monthly mortgage payment. Your total monthly payment will typically be more than this amount due to taxes and insurance.
A prepayment penalty means that the lender can charge you a fee if you pay off your mortgage early.
A balloon payment means that the final mortgage payment is a lump sum much larger than the regular monthly payments, often tens of thousands of dollars.
Mortgage insurance is typically required if your down payment is less than 20 percent of the price of the home.
Estimated Escrow. Additional charges related to homeownership, such as property taxes and homeowners’ insurance, that are bundled in your monthly payment.
Estimated Closing Costs is the sum total of all those closing costs. Torii can cover up to the full total of line D & H depending on the cost of the home purchased and the split in commission (see our Closing Cost Calculator for more detail).
Estimated Cash to Close is the total amount you will have to pay at closing, in addition to any money you have already paid.
Origination Charges: Upfront charges from your lender for making the loan.
Points: An upfront fee that you pay to your lender in exchange for a lower interest rate than you would have paid otherwise.
Closing Services (or “settlement services”): Third-party services required by your lender in order to get a loan. By working with Torii, you have access to our network of vetted lenders and attorneys that make it easy to close on our. home. It removes the hassle and ensures everything is as seamless as possible.
Other Costs: Costs associated with the real estate transaction transferring the property to you and costs associated with owning your home.
The Annual Percentage Rate (APR) is one measure of your loan’s cost.
The Total interest Percentage (TIP) helps you understand how much interest you will pay over the life of the loan and lets you make comparisons between loans.
The lender uses an appraisal to decide how much your home is worth. The appraisal is conducted by an independent, professional appraiser. You have a right to receive a copy. Add line to say: if it appraises for more than purchase price. You benefit for extra equity in the home. doesn’t change anything in the home. if it under appraises, the loan is based off of the appraised amount. Under appraises adds an extra step to see why it did/what the appraisal actually is.
Servicing means handling the loan on a day-to-day basis once the loan is made—for example, accepting payments and answering questions from borrowers. The lender can choose to service your loan itself, or transfer that responsibility to a different company.
For more tips from our lender partners, read about it here.