Loan Process
You’ve Found a House. What’s Next?
1. The Application
The loan application kicks off the loan process and is not complete until you have provided the following information: (1) Your name, (2) Your income, (3) Your Social Security number (and authorization to check your credit), (4) The address of the home you plan to purchase or refinance, (5) An estimate of the home’s value and (6) The loan amount or your down payment amount. Please enter your income and asset information completely; I can pull your debts from your credit report.
2. pick your pricing
After reviewing your loan application, I’ll send you financing scenarios with preliminary pricing and payment information. I price my loans based on the lowest wholesale interest rate for which you qualify. You have the option to lock in the wholesale interest rate and pay your own closing costs (borrower-paid option) or accept a higher interest rate and have the lender pay closing costs on your behalf (lender-paid option). I’ll show you the math and help you decide the best course of action.
3. Loan Estimate
4. intent to proceed
If you’re comfortable with the Loan Estimate I provided and intend to proceed, please let me know by phone, text, or email. Clear notice is required to proceed with your loan. In some instances, I send an “Intent to Proceed” document along with your Loan Estimate; simply e-sign the documents to make your intentions known.
5. automated underwriting
Once I have a complete loan application with a property address and hard credit pull, I’ll submit your file through Fannie Mae and Freddie Mac’s automated underwriting system for instant loan approval. A preliminary loan approval means your loan can close more quickly and that you are far less likely to have your loan denied at the last minute.
6. processing
At this point, my processor gets involved (but I don’t go away). She will order title work and the appraisal and collect all the documents we need for final underwriting. Be prepared to prove that all the information you provided on your loan application is accurate. We’ll need tax returns (2 years), W-2s or 1099s, bank statements, and more.
7. appraisal
An appraisal is an unbiased professional opinion of a home’s value and is required whenever a mortgage involves buying, refinancing, or selling property. We don’t want to order your appraisal until after you have negotiated repairs with the seller and your option period has expired. Once that happens, processing will contact you for payment. It usually takes 7-10 days to receive your final appraisal of value.
8. conditional approval
After your loan has been processed, it will be sent to underwriting for conditional approval. A conditional approval means your underwriter has reviewed your financial documents and determined that the loan will be approved so long as certain requirements are met. We’ll be given a list of ‘conditions’ that need to be satisfied for your loan to be fully approved and cleared for closing. Be sure to respond quickly to my processor’s requests for documents!
9. clear to close
“Clear to close” means the underwriter has approved your loan documents and all the conditions required for approval, and your file can proceed to closing. At this point, we’ll schedule your signing with the title company and work with them to balance the final Closing Disclosure. Although your loan has been approved, underwriting will do a final employment verification and credit check to ensure your credentials have not changed.
10. closing disclosure
A Closing Disclosure (CD) is a five-page form that provides final details about your selected mortgage loan. It includes the loan terms, your projected monthly payments, and the amount you will pay in fees and other costs to get your mortgage (closing costs). Once the CD is approved by the title company, agents, and lender, you’ll be given your final “cash to close,” which is the amount you’ll need to take to the title company for closing and funding.
11. closing
Closing is the final step in buying and financing a home. It’s also called the “settlement.” This is when you and all the other parties in the loan transaction sign legal documents and distribute funds, after which you become responsible for the loan. Closing usually takes place at the title company. A closer will explain each document and have you sign all the required documents. Please let me know if you’d like to review closing documents before your signing.
6. funding
After all parties have signed their closing documents, the title company will send them to our closing department for final review. If everything looks good, we will authorize the title company to disburse funds to the seller, title company, agents, etc. Try to schedule your signing early in the day – before 1:00 PM – to allow time for same-day funding. You can only get the keys to your new home once final funding has occurred.
Don’t Let Them Make a Monkey Out of You!