We are providing this overview of the purchase/financing/refinancing process so you can be prepared and know what to expect.


Financing a Property:

Loan Pre-Approval
With a pre-approved loan your mind will be at ease knowing how much money you have at your disposal when shopping for real estate. You can shop confidently knowing your price range and what monthly payments you can expect.

Sterling Financial will work with you to get pre-approval by obtaining a credit report and helping you complete paperwork determining your income and expenses. Problems can be cleared up and you will be given a full disclosure of all closing costs.

Working with a Real Estate Agent/Broker
Speak with several Realtors and choose one who you feel comfortable with and who will listen to your needs. Your realtor will appreciate that you are pre-approved for a loan. This will put you in the best possible position when shopping and negotiating. When your Realtor writes an offer, they can include a copy of your pre-approval letter to show the seller you are prepared to obtain the loan. This is also an advantage when the parties want to move quickly through escrow.

Escrow
When your offer to purchase is accepted, you will give a deposit check as a show of serious intent. These funds will be held by the escrow company while all the terms of the contract are carried out including loan processing, inspections, and a title search, to name a few.

Just before the close of escrow, you will sign the escrow documents. The escrow officer will tell you the exact amount of money you will need to put into escrow for the down payment/closing costs. You will need to obtain a cashier's check, from a California bank, made out to the title company or arrange ahead of time to have your bank wire the funds to the escrow account.

Funding the Loan
Sterling Financial will oversee the funding process, making sure the lender receives the signed loan documents and tracking the review of those documents to make sure everything moves along smoothly. When everything is in order, the lender will wire the funds to your escrow account. Once the title company has verified that the funds were wired, they will have the grant deed recorded in your name and, at that point, you own the property!

Refinancing a Property:
There are many reasons people choose to refinance. Perhaps a balloon payment is coming due or you'd like to take advantage of lower interest rates. Whatever the reason, Sterling Financial is available to help with the process.

Interest Rates
Interest rates fluctuate often and many times are listed inaccurately on the Internet. Sterling Financial would like you to call them (916-965-5702) so they can provide you with the most up-to-date and accurate interest rate information available. Their personal attention is much more than you can receive from a web site.

Appraisal
One of the first steps in the refinancing process is obtaining an appraisal of your property. Once the value is estimated, and application paperwork is complete, it usually takes the lender about 2-3 days for approval.

Loan to Value
When refinancing, it is important to think about the value of the property and how much is owed against it. The loan amount divided by the property value is called the Loan To Value or LTV. The LTV sets limits on the amount that can be borrowed against a property. LTVs can differ from lender to lender and also by the type of property, (if it is a rental property, second home or is owner occupied). The number of units, (single family, duplex, fourplex etc.) also plays a role in determining the maximum LTV allowable. LTVs can also help to determine interest rates.

"Cash Out" or "Rate and Term?"
There are two types of refinances: "rate and term" and "cash out." Rate and term means paying off existing loans and acceptable closing costs with the new loan with no, or only minimal, cash to the borrowers. Cash out transactions include the above as well as paying off debts and/or cash to the borrower at close of escrow.

Funding
If the property is owner occupied, there is a three-day rescission period during which the borrower can change their mind. The rescission period begins on the day after signing and ends at midnight three days later. Sundays are not counted in the rescission. During this period the loan papers or "funding package" are returned to the lender for review. The loan is funded when all conditions are met and the rescission is up. The funds are wired to the title company. Once the funds are verified, the deed of trust is recorded against the property and the loan is "closed." All pay-offs are sent out, and any cash to the borrowers is made available for pickup or is mailed.