Real Estate Financing and Settlement
The instruments
The promissory note is the promise to pay; the mortgage or deed of trust is the security instrument. Wyoming is a lien-theory state, so the borrower retains title while the lender holds a lien. Deeds of trust, with a trustee empowered to foreclose nonjudicially after statutory notice, are common. Know the difference between assuming a loan, buying "subject to" an existing loan, and a due-on-sale clause that can accelerate the balance.
Qualifying and disclosures
Underwriting looks at income, assets, credit, and debt-to-income ratio, with a common benchmark around 43 percent DTI for qualified mortgages. Conventional loans with low down payments usually carry private mortgage insurance, cancellable under federal rules as equity builds. Federal disclosure rules matter: the Loan Estimate goes out shortly after application, the Closing Disclosure shortly before consummation, and both must be compared for changed terms. Section 8 of RESPA prohibits kickbacks and unearned referral fees.
Traps
- Confusing the note rate with the APR, which includes fees.
- Treating prequalification as a loan commitment; preapproval is stronger but still conditional.
- Forgetting that discount points are prepaid interest, not a down payment.
- Assuming the seller pays closing costs-allocate per contract and the settlement statement.
Rule of thumb
Trace every dollar twice: once through the contract, once through the settlement statement. If a fee appears on one and not the other, find out why before closing.