Real Estate Contract Deadline
You fly to the United States, look at several properties with your real estate agent and finally sign a purchase contract. The finance contingency clause therein will be completed by your real estate agent. By completing the finance contingency clause (entitles you to resign from the contract if financing is not feasible) in the purchase contract you are taking the right step. However, here it also states in what time frame you have to file a loan application for your financing. In general this time period consists of five days after the contract was signed.
Our recommendation: Contact us prior to your house searching. This way we can prepare everything and can provide you with a mortgage "Pre-Approval" before your travel, which can verify your creditworthiness for a specific purchase price and loan amount. This will also be needed when presenting an offer on a property. If you have filled out our questionnaire for a pre-approval, we have all the data needed for your loan application and can start processing it right away. If you have not, please contact us for a FREE, no obligation pre-approval and we will forward you the questionnaire. This always saves a lot of time.
Time period for the loan commitment
According to the purchase contract an approval by the bank can be expected within 20-30 days.
Our recommendation:: We communicate with your real estate agent in order to set the time frame ahead of time. The more detailed these prior communications are the more relaxed the actual process will be.
The Closing Date
The most important day of the entire transaction. On this day the property will be transferred to you and your financing period will begin. The date of the closing is set in the contract from the very beginning and it is important to comply with it. If it has to be changed this has to be set up in accordance with the contract and the change has to be signed by both the seller and the buyer.
Our recommendation: In order to meet the interests of all parties involved, which means giving the seller the earliest date possible while also giving the buyer enough time for the financing process, an agreement on a realistic closing date has to be reached. We recommend at least 30-45 days, if possible 60 days. Your realtor can add to date, the statement "on or before". With this you can set a binding deadline; however, it offers that one can close even before the specific date is reached - as soon as the financing is completed.
Time frame for the processing of the financing
This is the time frame from the application until closing. Generally this time frame takes approximately 4 - 6 weeks. Different factors are crucial: Will you as the borrower obtain the documents needed right away or do you already have them? Will you be in the USA during the time of closing or will you be signing the closing documents in your home country?
T E R M S
Loan Maturity is the end of your loan or the technical way to express the loan length. This is the fixed time that your loan payments are amortized over, meaning the process by which your loan principle is decreased over the life of the loan. In almost all cases this period is 30 years.
In contrast to most other countries there are only very few lending models in the USA which include prepayment penalties. Without a pre-payment penalty you have the option of repaying your loan partially or completely at any point - without penalties. This means that the actual loan maturity can be determined by you.
The period over which the interest due to the lender is calculated. There is a wide range of programs which can be from 3, 5, 7, 10, 15 and 30 years. The interest periods must be regarded as being entirely separate from the maturity of loan.
There are many options and documents which are only valid for a certain period of time. The loan commitment for example is only valid for 30 days with some US banks. If the closing does not occur within this time frame, new conditions can be imposed. The appraisal of the market value of a property, which is established in connection with the financing, is valid for six months.
Deadlines for securing the interest rate
During loan processing you as the borrower have the right to let the interest rate "float" until 5-10 days before closing; rates can vary from day to day. However, for most US banks this is only possible after the processing of the finance application has already begun. 15, 30, 45, or 60 days of interest protection is common, and during this period the closing should take place. Extensions are possible in compliance with the latest conditions but the bank may impose a penalty in order to do so.
Consultations in advance are always FREE. As a foreign national you should definitely take advantage of this offer so that you can inform yourself about all of the different options you have, the most important deadlines, documentation required and the individual steps in advance!!