The mortgage process is regulated by both federal and state laws. Additionally, local regulations, including certain charges and fees, may vary by county. This means that the regulations and guidelines that apply in one state may be different in another state. This also means that if you are approved for a mortgage in one state you cannot transfer the approval to another state.
The differences in state and local mortgage regulations may affect your loan terms, including your mortgage rate and closing costs, mortgage amount and the loan programs you are eligible for.
For example, the mortgage rates in one state may be higher than the rates in a different state, which impacts the loan amount you can afford. Or if one county charges higher property or transfer taxes, your closing costs increase. If you are required to pay higher closing fees, you may not have sufficient funds to close your mortgage.
The state you are applying for the mortgage in may also apply limitations to specific loan programs. For example, Texas applies much different regulations for a cash out refinance than any other state.
The mortgage closing process and required documentation also vary by state. In some states the closing process is managed by a settlement agent such as an escrow company while in other states, primarily in the South, a real estate attorney manages the process. Some states use a deed of trust as the primary mortgage document while other states use a mortgage.
Additionally, differences in state laws can impact your property rights as well as the foreclosure process for a mortgage. For example, if you are married and live in a community property state, your ability to qualify for a mortgage as a sole borrower or own a home on your own may be impacted.
In addition to the state and local differences outlined above, it is important to highlight that no two properties are the same and mortgage approval applies to both the borrower and the property being financed. Just because you are approved for a mortgage on one property does not guarantee that you will be approved for a mortgage on a different property, especially if the property is located in a different state.
If the property value or type changes, it may impact your ability to get approved for the mortgage. For example, if the value of the new property is significantly higher or lower than the property you were initially approved for, you may need to increase your down payment. If you decide to buy a condo instead of a single family home, the documentation requirements are different. Additionally, if you want to buy a rental property instead of an owner occupied home, the loan terms and qualification guidelines change.
This is why if you change properties or states, you are required to submit a new mortgage application including updated information on the property you are financing. When you submit your new application, the lender orders a new appraisal report and title report for the property. In some cases the lender may also require a property inspection report. The lender’s underwriter reviews these new property-specific reports to determine your ability to get approved for the mortgage.
The good news is that unless your financial, credit or employment situation changed, the lender should be able to re-use your original loan application and credit report, which are typically valid for 60 days. Additionally, it should be easier for you to get approved as an applicant because you have been through the process before.
Please note that mortgage lenders are licensed by state. So if you decide to buy a property in a different county but in the same state, you should be able to work with your current lender. If you decide to buy a property in a different state, you may also be able to continue working with the lender as long as they are licensed in that state. The lender may be able to transfer your application to the new branch, which may save you time and money.
So if you are already approved but want to get a mortgage in a different state, your first step is to determine if your lender is licensed in that state. You should also take the time to shop different lenders in that state as you may be able to find better mortgage terms.
The table below compares mortgage rates and closing fees for leading lenders. We recommend that you contact multiple lenders to find the best loan terms. Click the view all lenders button at the bottom of the table to search for lenders by state.
“Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act examination procedures.” CFPB. Consumer Financial Protection Bureau, October 1 2012. Web.