Blog, Home Buyer Education

Understanding The Loan Process

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 and get the best loan for you funded the same day. Don’t worry, we do most of the heavy lifting for you, so you can concentrate on what’s important — preparing to move into your new home and save money!

There are five main steps involved in getting a loan. You’ll see that we’ve made your part in them as easy as possible, and we do all the work! That’s what we’re here for.

Step one: Determine how much you can borrow

This is a function of a couple things. How much of a monthly payment can you afford? And given your unique credit and employment history, income and debt, and goals, how much will a lender loan you? The first part you can get a rough idea of by using the calculators on our website. The second is a little more complex. First we complete a full application including: all borrower personal information, 2 years employment / income history, 2 years residential history, and asset information.  You can do this on our website but we will always go over it with you to insure all information is accurate and complete.  Next: “What do you want to accomplish? – You and the loan officer discuss your personal goals, ideas and objectives to get a better picture of what sales price, payments, and loan programs would fit you best.

Step two: Pre-qualify for your loan

Your information is processed and the loan options are generated and discussed at length with you.  No short cuts here, this is a very important part of the loan process. When a program is decided on we prepare a list of necessary documents.  We will also discuss this list with you at length, so you know exactly what you need from the beginning.  Please promptly return all necessary documentation so it may be reviewed. When documentation is verified a “PRE-APPROVAL” or “COMMITMENT” letter is generated.  Handle it with care — to a home seller, it’s like a suitcase full of cash! Your realty 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. It gives you buying clout! You already know how much you can afford and a pretty close range of what your payment will be.

Step three: Execute the contract and start final processing

Once you’ve made an offer and it’s been accepted, it’s time to order the title report, property inspections and the appraisal.  We will order the title and appraisal for you and your agent can point you in the right direction for any necessary inspections.  At this time we will also prepare all the government required disclosure paperwork for your review and signature.  These documents and sometimes be overwhelming, but don’t worry we fill them out for you and will be happy to explain them line by line.  If any of the information is incorrect simply put one line through the incorrect information, write in the correct information and initial next to it.

Step four: Underwriting

The underwriter verifies all the information we’ve provided in the loan file. Income and Asset documentation match the loan application The appraisal meets the lender’s requirements in regards to value and condition The title report is clean (there are not any liens against you or the property)   Step five: Closing and Funding Your realty agent and the seller’s will work together to designate an escrow/title company to handle the closing and funding of your loan. We’ll coordinate with the escrow company to make sure all the papers your lender will need are in order, and you’ll sign the loan documents with a notary/escrow officer present.  In most cases this will take place in a escrow/title company office with your realty agent present.

You’ve answered a few questions, given us some detailed information, applied online, and next thing you know, you’re moving in! We’re in the business of mortgage loans — so we do most of the work. Doesn’t that make sense?