An overview of the loan process
Make no mistake, there’s a lot involved in getting a mortgage loan. You wouldn’t be here on our website if you could fill out a one-page application get the best loan for you and fund the same day. What we do is most of the heavy lifting for you, so you can concentrate on what’s important — preparing to move into your new home, saving money, or making plans utilizing the equity from your home.
There are eight steps involved in getting a loan. I have provided you a step by step road map to guide you the entire way!
1. Determine how much you can borrow
How much of a monthly payment can you afford? Given your unique credit, employment history, income debt, and goals will determine how much a lender will loan you? We’ll also help you through different scenarios by asking a few simple questions. Based on standard lender guidelines, we’ll get you a good idea of what kind of terms and loan program you can expect to benefit from most.
2. Pre-qualify for your loan
This is where the rubber meets the road and you save the most money. You supply information about your employment, your assets, your residence history, and so on. We get your permission to run your credit score. When we review all this information we give you a Pre-Qualification Letter. Your real estate agent will use your Pre-Qual (as they may call it) to make the best offer on the home you choose, and the seller knows you’re pre-qualified. Being pre-qualified will help facilitate your real estate transaction.
3. Apply now! We make it easy
Once you’ve made an offer and it’s been accepted, it’s time to complete the loan application. It couldn’t be easier and you can do it right here on our website. When the time is right, we’ll order an appraisal to complete your transaction.
4. Processing and prepping file for underwriter review
The processor reviews the credit report and verifies your debt and payment histories as the VOE’s and VODs are returned. If there are any late payments, collections or judgments shown on the credit report a written explanation is required from you. Also, the processor reviews the appraisal and checks to see if there are any property issues that may require additional comment by the appraiser. Finally, the processor packages the loan in a pre-determined order and sends it off for underwriting approval.
It is vital that when you are asked to provide a document, you do so as quickly as possible. Failure to do so often leads to delays and having to push closings beyond the contractual date. During this step, it is their chief responsibility to “pre-underwrite” the file. Pre-underwriting is a proactive step where they not only shuffle the paperwork but examine the file as an underwriter would in order to ensure the success of a file when it is submitted for approval.
5. Underwriting and Approval
Underwriting is the core process involved in being approved for a mortgage. The underwriter is in charge of reviewing your file against the conditions of the loan program you have selected. They will confirm that all information included is accurate and facutual. In addition, they will verify income, debt, past rent, employment and other factors to decide if you are a good credit risk. Their decision will also weigh heavily on the appraisal report. This is due to the fact that the lender does not want to fund a loan that is more than the property is currently worth. Once the underwriter has reviewed the file thoroughly you will receive one of four responses after their evaluation: Suspended, Declined, Approved, and the most common response Conditionally Approved.
Upon receipt of a loan approval, you may be asked to provide additional information needed by the underwriter and will be notified of the conditions which must be met in order for your loan to close and fund. Once documents requested have been review by your underwriter she will notify your processor and escrow office that the file is “clear for loan documents” this means that the file has been sent to the document department where they prep your loan docs to be sent to escrow!
6. Signing your loan documents
A closing agent (also known as your Escrow Agent) reviews the settlement statement with you. This document includes all the final costs for the loan transaction. You will sign all documents such as the mortgage or deed of trust, note, Truth in-Lending Disclosure and other miscellaneous closing documents. You will give the closing agent a certified or cashier’s check for the down payment and/or closing costs. For purchase transactions, the seller will sign a deed and other miscellaneous closing documents.
Once you have signed the papers, the escrow company sends the completed papers back to the lender for funding approval. In this process, the lender confirms that all its instructions to the escrow company were followed, and approves disbursement of the funds. If this is a purchase transaction, funds are wired to the title company. If this is a refinance transaction, you have a three-day right of rescission. Yes, that’s right, you have three working days (Saturdays included) to say “Oops, I didn’t want that!” Once that period is up, you are assumed you wish to proceed with the loan, and the lender sends the funds to the title company.
8. Recording and close of escrow
The title company, once funds are received, reviews the file one last time to verify that all instructions are clear and consistent, and that all parties are in agreement. The title company then disburses funds strictly per written instructions. The next day, they record all the legal documents that have been executed, and record a reconveyance on all old liens. Once the new loan (and the grant deed in the case of a purchase) have been recorded, the loan and the escrow are considered closed.
Congratulations your loan has now been approved! At this point your loan officer has done his/her due diligence and has made arrangements for you to receive your keys to your new home!!
I hope that this was informative and you utilize this website to assist you in your home loan needs!