When purchasing a home, the loan process consists of the following 13 steps: 1.) Collect
Personal Information
1.) Collect Personal Information The first step in the loan process is for you to gather your income and asset documentation. In order to complete the full application online, you will need to collect information about your employment history, assets and debts. You will need addresses and phone numbers for every employer you have had over the past 2 years. You will also need to gather account numbers and balances for all assets and liabilities for all borrowers. This information will be downloaded to our database system using our secure server thereby protecting your security. 2.) Apply Online Once you have collected
your personal information, you can complete the entire
application process online from the comfort of your home
at any time, day or night. Once your online application
is received, your file will be reviewed by an experienced
mortgage professional to determine the most effective
program for your situation. You will be contacted by your
mortgage coordinator to discuss your mortgage options and
preferences. 3.) Approval / Additional Information Once your loan is approved, the lender will notify your loan coordinator as to any change in terms (i.e. loan program, term or interest rate) and lets them know what additional conditions are required before they can prepare the loan documents. Standard conditions include verifications of employment and assets, an earnest money agreement (real estate contract), appraisal, preliminary title report, homeowners insurance binder, as well as letters of explanation regarding changes in employment, late credit payments and other situations. 4.) Verifications Most loan programs require verifications of rental history, employment, and assets (such as investment and banking accounts) in order to certify that the information that you represented is accurate. Once your loan is approved, your loan coordinator will send verifications out to your employers, banks, and landlords. Once you have been approved for a mortgage and price range, you can make an offer on a property which appeals to you. It is recommended that you use the services of an experienced Realtor who can help you find the type of home and area you prefer. In addition to helping you find a home, Realtors can evaluate what comparable homes in that area have sold for thereby giving you an idea what a fair offer would be. They also assist you in writing and negotiating the offer. All of this service is free to you since the seller pays their commission. 6.) Home Inspection Having your home professionally inspected is recommended but not usually required. Home inspections are extremely valuable in determining needed repairs to the home. Inspectors examine the plumbing, heating, roofing, siding, and electrical systems of the home as well as the crawl spaces under the home to assess the foundation. They will then educate you as to any flaws in the property which may require repair either now or in the future. Home inspections typically cost between $275 - $350 depending on the size of the home. This is a small price to pay compared to finding out that you new dream home desperately needs a new roof, furnace, or siding. The peace of mind alone is worth the cost. 7.) Title Insurance / Escrow Once your offer has been accepted by the seller, the listing agent will open an account with a title insurance/escrow company who will coordinating your transaction. This company will essentially act as the intermediary between you and the seller to ensure that both parties interests are being met according to your earnest money agreement. This company will also perform a title search to ensure that there are no outstanding liens attached to the property. Once they verify that the property can be transferred without incident, they issue a title insurance policy ensuring you against having the property attached by a previous lien holder. 8.) Appraisal Once you have had the home inspected and you are comfortable with its condition, your home will need to be appraised. Appraisals are used to determine the true value of the home based on the recent sales prices of comparable homes in the area. They do not typically assess the condition of the property, only the value. Before the appraisal can be ordered, you will need to submit a check to your loan coordinator to cover the cost of the appraisal. Typically, the cost for a full appraisal is $400. Some loans will only require a limited, drive by appraisal which run between $250 - $350. This is the only time that you will experience a cost before closing and the deposit will be credited to you at closing. 9.) Home Owner’s Insurance You will also need to contact an insurance agent to arrange for a homeowner’s insurance policy to protect your home against fire, theft, vandalism and other threats. You will need to contact your loan coordinator with the name and phone number of the insurance agent once you have selected one. Your insurance agent will then issue an insurance binder with the mortgage companies name as beneficiary. The initial annual premium will be collected at closing. 10.) Submit Conditions Once we have received all of the outstanding conditions that the lender has requested, those items are submitted to the underwriter for approval. The final underwriting process usually takes 48 hours. 11.) Loan Document Preparation Once the underwriter has reviewed your file and signed off on all conditions, your loan is given authorization to have the loan documents drawn. This usually takes 24-48 hours. Once the loan documents are prepared, the lender forwards the documents to the title & escrow company to arrange a signing appointment. 12.) Signing Once the title &
escrow company receives your loan documents, they will
review them and work up the final figures. They will then
contact you to schedule a signing appointment and tell
you the exact amount of money you will need to bring to
closing. At your signing appointment you will need to
bring a photo ID, a cashiers check for the amount needed
to close, and any additional documents that had been
asked to bring to closing. This may include updated pay stubs, letters of explanation as well as any other
original document bearing your live signature. 13.) Funding Once the lender receives
your loan package, they will review the documents to
ensure that all were signed correctly. They will also
review the file to ensure that all conditions have been
met. Once they are satisfied that all conditions have
been met, they give the loan final approval and order the
funds to be wired to the title/escrow company. |
