What to Expect When Securing a New Home Loan The mortgage application and approval process can be daunting, but an understanding ofthe steps involved can help mitigate some of those concerns.
What To Expect When Securing A New Home Loan
What to Expect When Securing a New Home Loan
The mortgage application and approval process can be daunting, but an understanding ofthe steps involved can help mitigate some of those concerns. Here is what to expect whenapplying for a new home mortgage:
Mortgage Process Summary
Step 1: Pre-Approval. Before embarking on a new home search, a pre-approval from atrusted mortgage professional should be secured. A pre-approval will consist of a creditcheck and review of income and down payment documents. These items will be analyzedto determine what price range and program you can qualify for. Once complete, a pre-approvalletter will be generated.
Step 2: Application Process. Once a property is identified and a purchase contract isexecuted, the formal loan application process can begin. The first step in this process is toselect a loan program offered to you by your loan officer. Its also advisable to lock in theinterest rate at this time. Once those details are solidified with you and your loan officer,an application and disclosure package will be generated for signature. Additionaldocuments may also be request at this time to complete the loan file. Upon receipt of alldocuments, the file will be submitted to underwriting for formal approval. An appraisaland any other property reports will be ordered at this time as well.
Step 3: Underwriting Process. After the initial review in underwriting a “conditionalapproval” will be posted. This approval letter will detail what additional items are neededto conform the file to the underwriter’s specifications. As with the application process,once the requested items are compiled, they are sent back to underwriting for review.Ideally the file is given a final clearance after the review, but its not uncommon for thisprocess to have a few cycles. This process averages about two weeks.
Step 4: Closing Process. When the file is completed in underwriting, a final approval willbe posted, and the closing process can begin. At this stage a final Closing Disclosure willbe generated to detail the final costs/terms of the transaction. Three days after thisdocument is signed, the actual loan documents can be prepared and delivered to the escrowagent. After executing the loan documents, the file will be prepared for funding.Generally, the funding process runs 2 days. Once the loan is funded, the title company willrecord the new deed and legal documents making the closing complete!
Tips for a smooth process
Communication. Having an open line of communication with your loan officer isimperative- it’s the single most important component of a successful transaction. Be sureto ask any questions you may have about the loan terms, costs, process, ect. Consistentcommunication will also help to align expectations, further supporting a smoothtransaction process.
Be responsive. Responding quickly to requests for documents and other requests fromyour loan officer will ensure that your loan moves forward as quickly as possible.
Report any changes. Unexpected events can occur but its important that those arerelayed as soon as possible. Whether it’s a job/income change or fluctuation of availableassets, reporting them quickly will allow the changes to be addressed head on.
Avoid securing any new debt. The lender monitors the credit report through the time ofclosing and any new debts- or significant changes to existing debt- will be questioned.Any new loans/increases in credit card debt should be avoided. If a circumstance ariseswhere a new debt cannot be avoided, communicate the issue to your loan officer rightaway to ensure that your loan profile can withstand the change.
Avoid large transfers/deposits. Bank account documentation will be scrutinized, andunsourced deposits will be questioned. If a large deposit/transfer does need to be madeduring the transaction, be sure to have documentation available to properly source a largedeposit.
With a bit of understanding, proper preparation, and diligent communication, even thetoughest loan profile can experience a stress-free mortgage process.
As always, I am here to assist with your real estate needs and questions.
Chris Hodges | Real Estate Consultant | BRE: 02038259
Direct: 951-294-1808 | Email: Chris@SurpassRealty.com
If you have any questions on the loan process, feel free to reach out to:
Jennifer Castro |Senior Loan OfficerNMLS: 327117 | BRE: 01294908
Direct: 951-325-7147| Cell: 951-551-1583 | Email: email@example.com