THE MORTGAGE LOAN PROCESS
We debated whether to include this, because it makes the process sound like the ordeal it is — but we make it easier. In fact, you don’t even need to read this, because we’ll cover it with you as the process unfolds. The point is, we try to humanize the process and make it go smoothly. Let our expertise grease the wheels!
1. Pre-qualifying for a Loan
Pre-qualification occurs before the loan process actually begins. We gather information about your income and debts, and determine how much house you can afford.
It helps to have a realistic idea of your price range before you start shopping for a house.
If you are refinancing the loan on your existing home, then the pre-qualification process can help you decide whether refinancing is a good choice for you. Bear in mind, it’s not always a good idea to refinance. Sometimes sticking with what you have IS the right choice.
2. Applying for a Loan
Completing an application is the beginning of the loan process. The information you provide on the application provides a picture of your overall financial health, which the lender will use to determine your eligibility. We work with you to complete the mortgage application and make sure you supply all of the required documentation for processing.
We also discuss with you the various fees and down payment options at this time. The loan officer then delivers a Good Faith Estimate (GFE) and a Truth-In-Lending Disclosure (TIL), along with other disclosures that itemize the rates and estimated costs for obtaining the loan.
3. Pre-Processing Your Loan
We will typically submit the application to an automated underwriting system (FannieMae and/or FreddieMac). This will confirm which supporting documentation we will need to submit with your application. This step can also alert us to possible red flags which are better dealt with at this stage.
4. Submitting Your Loan
At this stage, we submit the entire loan package to the lender. We work with many lenders and can select the best one for your situation.
The lender’s underwriter reviews the application, supporting documentation, and credit history to determine your eligibility. If the underwriter approves the loan, the lender issues a conditional loan approval. At this point, there are often “conditions” which require additional documentation. (For instance, the lender might request a letter of explanation about an inquiry on your credit report or an explanation of a large deposit on your bank statement.)
During this phase, a property appraisal is ordered and reviewed by the lender to determine if there is sufficient equity for the loan requested. This is also when we order the preliminary title report.
After all conditions are cleared, the lender will issue a final loan approval. Final loan documents are then ordered, and the borrower’s final signing is scheduled.
We’re almost there! After all documents are signed, they are returned and reviewed by the lender. If funds are required to close (down payment or closing costs), they must be deposited with the escrow company (or closing agent) in the form of a cashier’s check or a wire transfer. When funds have been received, the lender can then schedule the funding of your loan.
Once funded, the closing agent records the Deed of Trust (which is the tool that makes your house the collateral for the loan).
And you’re done! Pop the cork!
If your questions aren’t covered here, just ask!
Call 510-654-2200 or send us an email.