Many first-time homebuyers have lots of questions in their minds about how the home loan process works and they end up being confused, especially when they hear someone else experience.
In this post, we will learn the perfect mortgage process.
This mortgage process is a guide to show homebuyers particularly first-time homebuyers what the home loan process is going to look like from start to finish.
This mortgage process road map is great for those who are entering the home buying process so that they know what to expect and what is coming next
When you start your conversation in the mortgage process the lender’s loan officer will get a basic idea about your finances.
Post the conversation the loan officer will ask for some documents to run through the numbers and provide you with a pre-approval.
You will use this pre-approval letter with your realtor to find the house which matches your budget and qualification.
Once you find the house you will be signing a contract between you and the seller with the terms and the title company’s information.
Within a day or two of getting into the contract on a home purchase, you can expect to receive the initial loan disclosure from the lender or the broker.
As the lender will get the contract from the agents, which will tell the lenders who the new titleholder will be. Lenders will request the title fees from the title company.
Once the lender has those fees they will send you the initial disclosure for signing. Your signature will show your intent to proceed with the mortgage process.
Once the initial disclosure is signed and you have shown the intent to proceed, the lender will then order for appraisals which would be on day three or four.
Most of the time you as a buyer have to pay for the appraisals as an out-of-pocket cost.
The price for an appraisal could be anywhere between $400 to $500 or maybe more depending on the type of property you are planning to purchase.
Once your appraisals are ordered the next step in the mortgage process is where your loan officer will submit your file for underwriting.
This could happen on day four or five from the day you signed your contract.
In this home loan process, the underwriter will go through the documents that you have provided and make sure they meet the guidelines for the loan that your loan officer has chosen for you.
The underwriter will then share the insights of the loan which he or she notices, which is also known as conditions.
This process may take up to a couple of days depending on the lender. Our preferred lenders can get the loan to conditional approval status within a few hours.
Once the initial underwriting is done, the loan officer will get conditional approval on your mortgage. What that means is your loan is approved, post few conditions are fulfilled.
In this step of the home loan process, the underwriter may ask for additional documents such as additional bank statements, additional income documents, appraisal reports, etc.
Once you submit that the underwriter will review those documents, and once they are verified, your loan is clear to close.
You are looking to be in this step of the mortgage process on day 11-12 from the day you have signed the contract.
Once you get the required documents and the appraisals verified by the underwriter, you would get the final approval for your loan.
This could be around day 15 where your loan officer will send you the final closing disclosure.
The important thing about the closing disclosure is you know when you receive that as a client, numbers on your loan cannot change. Then you take a look at the numbers on the final CD.
Most of the lender would usually bump up the numbers in the initial disclosure to ensure that they have enough buffer in case of any issues in the fees which were not taken into consideration initially.
The final CD is sent to you three days before you sign your final loan documents.
This is the final step in the mortgage process. After three days of you receiving the final CD from the loan officer, you are with a closing agent who will make sure that all the paper works are in order and signed by you.
Our preferred lenders can get your loan signed and funded the same day.
This is a simple road map of a three-week perfect mortgage process.
Compare Closing LLC can help you to get in touch with the lender who would be in a position to close your loan within 21 days.
If you need more information about how the loan process works, get in touch with one of our experts today or call 800-756-0809.
Home buying or refinancing could be one of the most overwhelming experiences. There could be a lot of confusion as the people in the industry have made things not very understandable to be able to go through the mortgage loan process.
So today we will go through step by step understanding of what happens in the process and what to expect during the mortgage loan process.
This can happen at a couple of different points during the mortgage loan process. If you are buying a home, the first process begins with talking to a lender and getting a pre-approval.
Basically, the lender will go through some client questionnaires to get your financial status.
After that, you would be asked to submit the documents to verify your application.
Common documents required are mentioned in our post “List of Common Documents for Refinance”. In the complete application process, there would be a credit check.
What your lender would be doing is assembling a picture so that you would be able to qualify for the house that you want, or qualify for the loan amount that you are refinancing.
After the lender issues you a pre-approval you would be able to partner with the realtor to look for some homes that you like.
After searching for some houses you find one that you enjoy, you would now write contracts.
Once you sign a contract, your lender gets a copy of the contract as well, and that is when your loan process starts.
In this part of the mortgage loan process, the lender takes your application and the documents you have submitted and puts them together in one file to be able to send it to the underwriter.
In this process, lenders might ask for some updated documents like more recent paystubs or maybe some additional documents to make sure the file is wrapped up and ready to go.
In this process, you would also receive a loan estimate which would give you every single feature of your loan.
To understand what is included in a loan estimate, you can go through our blog post “Understanding Loan Estimate”. A loan estimate would give you a clear idea of how your loan is going to function in the future.
Once we get that stage done, we move on to the appraisals.
Most lenders go ahead and order the appraisal early because sometimes, it can take up to a week to get the appraisal report.
The borrower pays the cost of the appraisal upfront. After the payment, the appraisal is scheduled, and a certified appraiser will review the property in question for evaluation.
The appraiser will submit the appraisal report to the lender who would mention the appraised property value.
This is one of the critical parts of the mortgage loan process as it determines the value of the house and the down payment that you need to make for it if you are planning to purchase a home.
It also helps the lender to know the exact loan to value ratio.
Once the lender orders the appraisals, your loan file is then forwarded to underwriting. Underwriting is done by the underwriter, who is an individual working for the lender.
An underwriter will check the files and ensure that everything meets the standards of the federal guidelines.
Basically, an underwriter would be looking at all the information that the lender has submitted including all the documents, and verify that information and make sure that your loan and your circumstance fit well with the federal guidelines for different types of mortgages.
After going through underwriting, what the lender would be expecting is a conditional approval.
Conditional approval means your loan is approved and ready to go, there are just a few things that need to be cleared before the final approval.
Conditions could be anything that the underwriter thinks is necessary to match the federal guidelines.
For example, a page missing from your bank statement to the homeowner’s insurance quote or any other missing details. It is pretty normal to have few conditions to have from the underwriter.
After the lenders receive the conditions, they will get in touch with you to make sure the missing documents or information is supplied, and all the possible conditions are cleared.
After all the conditions are cleared, the lender will now send you a closing disclosure, also known as a CD.
This is very similar to a loan estimate. The only difference is this document will have more accurate details and numbers which would now be finalized at the closing table.
The way that the regulations are set up in the mortgage loan process is that the loan estimate is a bit overstated.
The closing disclosure is a bit less and the final disclosure which would be sent by the title company would be the closest and would be most accurate to the fees that you would be paying at closing.
Once you sign the CD, the status of your loan process moves to ‘Clear To Close’. And when the status goes to clear to close, it means you can take a breath. The entire mortgage loan process is done and over with.
All the lender would be doing now is scheduling a time to close on your purchase or refinance. And after that, the final documents would be signed by the borrower at the scheduled time after which your loan would be funded.
Above mentioned steps are what you can expect during a mortgage loan process. Most of the time, people are only aware of the status of their loan process through the lender.
And if you are not aware of the terms, the process might sound a little confusing.
It entirely depends on the loan officer you are working with. A professional loan officer would always keep you updated with all the information about the process of your loan.