The Loan Process – Seven Steps To A Mortgage
"Pre-qualification" occurs before the loan process actually begins, and is usually the first step after contact is made. In a pre-qualification, your loan officer gathers information about the income and debts of the borrower and makes a financial determination about how much house you 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.
This usually occurs between days 1 and 5 of the loan.
You, the buyer, now referred to as a "borrower", complete a mortgage application with an loan officer and supply 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 which itemizes the rates and associated costs for obtaining the loan.
3) Opening The File
This occurs between days 3 and 10.
At this time, as your lender, we would order a property appraisal, property survey and credit reports, mail out requests for verifications, if necessary, for employment (VOE) and bank deposits (VOD) and any other documents needed for processing of the loan. All information supplied by you (the borrower) is private, secure and reviewed at this time. Then a list of items not yet received is compiled.
Processing occurs between days 5 and 25 of the loan.
The "processor" reviews the credit reports and verifies your (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. 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 your lending officer.
"Lender underwriting" occurs between days 15 and 25.
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 you (the borrower) will be contacted to supply more documentation.
"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 us – your mortgage company within 48 hours.
"Pre-Closing" occurs between days 20 and 30.
During this time the title insurance is ordered, all approval contingencies, if any, are met, and we would schedule a closing time for your loan.
Closing usually occurs between days 30 and 45 of the loan.
At the closing, we "fund" your loan for you 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 you, the borrower, finishes the loan process and actually buys the house.
Rene the Mortgage Guy - Financing the World one home at a time