2 Common Issues With Mortgage Financing and Florida Residential Closings

With all of the complications that might potentially arise, buyers of Florida real estate can find the closing process to be perplexing. Many buyers will finance their mortgages by acquiring a home loan from the bank. This effectively gives said financial institution a lien on the property until such time as the loan is completely paid off.

In addition, the mortgage also grants the lender the right to demand that the homeowner fulfill certain obligations, some of which are required by law and others which are simply performed at the behest of the bank. What follows are two series of complications which can result from financing a mortgage.

Dealing with the Lender

As a buyer, you are not required to utilize the services of any lender in particular and you have the option of filing loan applications with several different financial institutions. The law — specifically, the Federal Real Estate Settlement Procedures Act (RESPA) — requires that the mortgage lender provide the applicants with a good faith estimate of the closing costs. This estimate must be given within three days of receiving the loan application. These estimates go a long way toward helping the buyer make the best choice.

It should be reemphasized, however, that these are only estimates. Changes can occur and a buyer who has not established a firm, working relationship with the representatives of these institutions can dissuade him or herself from speaking up. This can lead to trouble when attempting to properly complete the myriad documents required in order to close a property transaction. For more information, visit Marina Title’s Buyers and Sellers page.

Dealing with the Documents

Among the documents referred to above, the promissory note and mortgage sit at the top of the list. The former details the term of the loan (the length of time within which the borrower must pay off the debt), the amount of debt (read, the amount the buyer borrowed), insurance rate, grace periods, late fees and so on. In addition, the note represents the buyer’s promise to pay the amount of the loan in full, hence the name. The borrower is responsible for the costs of obtaining the loan.

The mortgage itself represents the lien placed on the property. This lien serves as collateral for the promissory note. Should the borrower fail to meet the conditions set forth in the latter, for example, by failing to make the mortgage payment within the allotted time, the bank will repossess and foreclose upon the home. The borrower will also be held responsible for paying real estate taxes, preventing alterations to the property that are not approved by the lender and insuring the property, among others. The entirety of the balance described within the promissory note must be repaid upon the lease, sale or transference of the property without the lender’s prior written consent.

Additional Documents

There are many documents the buyer will need to complete before obtaining a loan, including a truth-in-lending disclosure statement, an authorization for the Social Security Administration (SSA), a notice of right to receive a copy of appraisals, various IRS forms, a mortgage brokerage business contract, a TRID Notice and more. The lender should also require a real estate title search be conducted, to ascertain any issues surrounding the title. A title insurance policy is necessary to protect your rights against unforeseen consequences, and an additional lender’s policy will ensure the bank’s investment is equally well-protected.

Dealing with the various complications that are naturally occurring in the closing process can prove wearisome. The professionals at Marina Title offer their expertise and knowledge in answering any questions pertaining to mortgages, title insurance, financial institutions and many other matters governing Florida real estate. Contact us by email at [email protected], or by phone at (305) 901-5628.