Mortgage Process
Mortgage Consultants and Realtors agree that it is best to have prospective home buyers prequalified for a mortgage before they start looking for a home. This allows the Realtor to focus the home search in the correct price range. After helping the Buyers and Sellers negotiate an Accepted Offer to Purchase, the Realtor gives way to the Mortgage Consultant. The following steps occur in securing a mortgage loan approval for the home buyers.
Step 1 –
The home buyers meet the Mortgage Consultant and complete a mortgage loan application and all the other required documents. The home buyers should have all the supporting documents that the Mortgage Consultant has requested (W-2s, bank statements, etc.) at this appointment. Providing this information is required and having it at the initial meeting will help expedite the process. This meeting usually takes 1 to 1.5 hours.
Step 2 –
Once the application has been taken, the file is given to the Loan Processor. The information on the application is verified; written verification forms are sent to employers, depository institutions, and creditors. A credit report is ordered to confirm that the applicant(s) pay their debts in a timely fashion. An appraisal is obtained to verify that the property value will support the loan being requested. During this process, questions may be raised and the buyers may be asked to provide explanations and/or additional documentation. This is a normal occurrence and buyers should be reassured that this is not a “bad sign” in all cases.
Step 3 –
After all the necessary documents have been obtained, the file is prepared for underwriting. The Lender’s Underwriter examines the file to determine whether or not the loan conforms to the required guidelines. Occasionally, the Underwriter will ask for additional information before rendering a decision. Again, this is normal and should not be cause for alarm. Once the Underwriter is satisfied that the loan meets the necessary standards, the loan is approved and written notification is provided. This notification is called a Loan Commitment. The underwriting process takes 48 to 72 hours.
Step 4 –
Upon receiving loan approval, any conditions the Underwriter issues must be satisfied. These conditions should be dealt with quickly because the closing time and date are not set until the conditions are satisfied. Once the closing is set (the listing Realtor usually coordinates the closing date and time), the listing Realtor and the closing agent prepare the necessary documents. At the closing, numerous documents are signed to finalize both the mortgage and purchase of the home.
Once the documents have been signed, the Sellers receive the proceeds of the sale and the Buyers receive the keys to their new home!
The entire Mortgage Loan Application Process normally takes 4 to 6 weeks from application to closing. This time period can often be shortened if circumstances require it. This is a cooperative process between Buyers, Sellers, Realtors, and the Lender.
