Here we tell you everything you need to know and do before making that important decision.
Many things happened to get to the moment of signing your mortgage loan. At that moment, you accept and contract a commitment with the bank to pay a debt at a specific term and rate.
If you are at this stage, it is because your application passed the bank’s risk analysis and approval flow. That is, after reviewing your personal history and financial history, the lender approved to lend you the money.
Then begins a stage known as the official closing of mortgage credit conditions. What does the official closing of mortgage credit conditions consist of?
It is the phase when the bank presents you with the conditions in which it can deliver the money to you. In this stage:
- The bank prepares the final Closing.
The institution prepares a proposal that contains the data of the value at which you acquired the property, the percentage to be financed, the interest rate, and the term.
Generally, the term of validity of these formal quotes is seven days.
- Acceptance (or rejection) of the terms of the bank’s offer.
This is when the decision on your mortgage loan application rests with you.
The bank or entity that lends the money sends you the offer, either by mail or by e-mail. It is the exact moment when you must give the go-ahead, either through a signed letter or a confirmation via e-mail.
We recommend that you check that the document correctly includes:
- Your personal information and background
- Basic data of the property
- Acquisition value
- Financing percentage
- Rate and term expressed in the proposal
- You must make a Personal Health Statement (DPS).
You must send this information as soon as possible to have credit life insurance coverage, which is mandatory for a mortgage loan.
- The bank does an appraisal and title study of the property.
Both analyzes are essential to have a reference value for the property you are acquiring, as well as the state in which the titles of this real estate are. A specialist company subcontracted by the bank makes these reports.
Likewise, the Superintendency of Banks and Financial Institutions (SBIF) emphasizes that you must review these data one by one :
- Percentage of financing requested concerning the foot you deliver.
- How much is the interest rate and if there is, how much is the commission?
- Payment methods and grace periods.
- Credit and fire insurance values and under what conditions are they effective.
- Prepayment conditions (period restrictions, amounts, prepayment commissions).
- Type of guarantee in which the home is mortgaged. You should check if it is general (to service any debt) or specific (only for mortgage debt).
If you agree with the offer, the bank proceeds with the preparation of the draft deed and its subsequent sending to the notary.
What if you want something different in the mortgage loan offer?
You can request to review the interest rate, term, or percentage of the financing. However, keep in mind that the lender argued that the offer you receive is in line with the risk analysis is performed on your request during the approval flow.
Revision of the draft writing at the notary’s office
You should review the draft of the deed at the notary’s office very carefully. A good practice is to request legal advice at this stage so as not to overlook any detail of the document resulting from ignorance.
What if the draft of the mortgage loan is correct?
If the background information in the document is adequate and only if you agree with the full draft, then you proceed to sign the deed.
Do not sign if you have any questions or some content of the draft generates any uncertainty. The entity that lends you the money will help you resolve your queries and doubts.
What happens after you sign the draft deed?
- Then the selling party (person who sells the property or real estate) signs.
If the seller has a mortgage loan associated with the real estate you are buying, the bank in charge of that loan must also sign. Your bank should be in charge of coordinating this last signature.
- Then, your bank signs the draft of the deed and proceeds to make the closing of copies.
- Finally, your bank begins the process of entering the deed of your new property to the Real Estate Custodian, where the property is registered in your name and the guarantee in favor of the bank, to later prepare the Final Report.
This report is very important because with it the payment of your mortgage credit is made to the seller. Remember that you apply for the loan, but the one who receives the money directly is the one who sells.
- Once the credit is paid to the seller, your bank sends you a copy of the deed of sale, signed by everyone, along with the corresponding certificates.
- With the deed in your hands, the bank begins the last stage, known as Settlement of the operational expenses of your mortgage loan, that is, the expenses incurred to carry out the operation.
It is your right as a financial consumer to have a complete breakdown of all the administrative expenses of the process. If the bank makes a charge not included in that gloss, notify the same institution or the National Consumer Service.
According to Serna, other rights you have as a financial consumer to accept a mortgage loan include:
- You can freely choose the property appraiser among the alternatives that the bank gives you.
- The components of the CAE and the Total Cost of Credit (CTC) must be duly detailed.
- At the time of signing the deed, you should receive a summary sheet, which follows a standard format.
- Once you formalize the credit, you have the right to receive periodic information on the status of your loan.
- You can pay your credit through electronic transfer and Automatic Checking Account Payment, also via cash deposit at a branch.
- At any time you have the right to have the bank give you a settlement of your credit and the cost of its early termination in case you want to prepay.
If you still have doubts, the National Consumer Service (Sernac) compiled in a document the most frequent questions of mortgage credit consumers, which you can review here.
During the official process of closing the conditions of the mortgage loan, the decision to accept what the bank or mutual company offers you is in your hands. You must follow the steps that we tell you here to be able to make the closing and calmly make the decision.
To obtain the mortgage credit that is best for you, you must thoroughly review the offer of conditions made by the credit institution from which you asked for the money.
Finally, it is recommended that you carefully evaluate the interest rate, term, and financing percentage. These factors will define your future borrowing capacity.