|
The Loan Process
Why Use
a Broker?
Mortgage Calculator
Mortgage Glossary
FAQs
|
Pre-Qualification
Pre-qualification occurs before the loan process actually
begins, and is usually the first step after initial contact is
made. The lender gathers information about the income and debts
of the borrower and makes a financial determination about how
much house the borrower may be able to afford. Different loan
programs may lead to different values, depending on whether you
are qualified for them, so be sure to get a pre-qualification
for each type of program you are suited for.
Application
The application is actually the beginning of the loan process
and usually occurs between days one and five of the loan. The
buyer, now referred to as a "borrower", completes a mortgage
application with the loan officer and supplies all of the
required documentation for processing. Various fees and down
payments are discussed at this time and the borrower will
receive a Good Faith Estimate (GFE) and a Truth-In-Lending
statement (TIL) within three days that itemizes the rates and
associated costs for obtaining the loan.
Processing
Processing occurs between days 5 and 20 of the loan. The
"processor" reviews the credit reports and verifies the
borrower's debts and payment histories as the VODs and VOEs are
returned. If there are unacceptable late payments, collections
for judgment, etc., a written explanation is required from the
borrower. The processor also reviews the appraisal and survey
and checks for property issues that may require further
discernment. The processor's job is to put together an entire
package that may be underwritten by the lender.
Underwriting
Lender underwriting occurs between days 21 and 30 or sooner. The
underwriter is responsible for determining whether the combined
package passed over by the processor is deemed as an acceptable
loan. If more information is needed, the loan is put into
"suspense" and the borrower is contacted to supply more
documentation.
Mortgage Insurance
Mortgage insurance underwriting occurs when the borrower has
less than 20% of the loan amount to put towards a down payment.
At this time, the loan is submitted to a private mortgage
guaranty insurer, who provides extra insurance to the lender in
case of default. As above, if more information is needed the
loan goes into suspense. Otherwise it is usually returned back
to the mortgage company within 48 hours.
Pre-Closing
Pre-Closing occurs between days 25 and 30. During this time the
title insurance is ordered, all approval contingencies, if any,
are met, and a closing time is scheduled for the loan.
Closing
Closing usually occurs between days 25 and 45 of the loan
(depending upon the designated length of your escrow). At the
closing, the lender "funds" the loan with a cashier's check,
draft or wire to the selling party in exchange for the title to
the property. This is the point at which the borrower finishes
the loan process and actually buys the house. |
