Mortgage Loan Process

Preparation - Loan ProcessPREPARATION

You need to establish a monthly housing budget for yourself. Yes, when you start working with a loan officer or a lender they will evaluate your financial situation and determine an amount you will be approved for.

You also need to be saving as much money as possible to cover items such as a down payment, closing cost, and possibly cash reserves. The more money you have saved up the better position you will be in. Lastly, you should start gathering the necessary financial documents you’ll need for the mortgage application process. Getting a jump start on the documents that will be required for approval will make for a smoother loan process.


Pre-ApprovedPRE-APPROVAL

This must be one of the most important steps in purchasing a home. Most buyers skip over this step and will start looking for a home before ever getting pre-qualifed In fact, an experienced Real Estate Agent will not even work with a buyer without being pre-qualifed first.

Pre-approved means that you are working with a loan officer and submitting a mortgage application (also referred to as the 1003), along with your financial documents before you found a home. The goal with a pre-approval is to find out how much the lender will approve you for, before you start looking for a new home.


Application - Loan ProcessAPPLICATION / ORIGINATION

This step is actually the start of the loan process. At this point you have made an offer to purchase a home and your offer was accepted. If you completed step 2 (Pre-Approval) from above then you are already head of the process. If not, you will be working with your loan officer to complete the mortgage application, along with providing your financial documents.


APPLICATION / ORIGINATIONUNDERWRITTING

During this process the bank will review your loan request and evaluate your financial credentials to determine if your loan will be approved or if you need to submit further documentation. In the case your loan can be approved; the Underwritter will issua a Loan Commitment Approval.


Clear ConditionsCLEARING CONDITIONS

As stated above the most common receive response from underwriting is a conditional approval. The reason for this is because your application is not 100% ready to close. If you have an experienced mortgage loan officer must of the conditions that need to be cleared will be items that the lender clears behind the scene such as; obtaining a clear title policy, verifying you insurance policy, appraisal, project approval (condo units only), and verification of employment or deposits (VOE or VOD). These items usually take longer to obtain then the underwriting process.


Closing - Loan ProcessCLOSING

Closing is the last step in the loan process. Once you receive the “clear to close” your application will be sent to the closing department. The closing department will work directly with the Title Company to prepare the necessary documents for the loan to close. The lender will send closing instruction and the closing documentation to be signed by the borrower. The Title Company will prepare the final Settlement Statement, also known as the HUD which will require approval by the lender and all the parties involved. Once the HUD has been approved by all parties the lender will wire the funds for your loan to close.