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The Steps of The Mortgage Process
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
Step 1 - Pre-approval
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.
Step 2 - Post Contract
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.
Step 3 - Appraisals
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.
Step 4 - The Underwriting
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.
Step 5 - Conditional Approval
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.
Step 6 - Final Approval
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.
Step 7 - Closing
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.
Conclusion
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.
Thanks for helping me understand how mortgages help you get the financing that you need for a home purchase. I’ve been thinking of purchasing a home lately, but I have no idea where to start. I’ll probably look into a mortgage service expert for advice regarding my purchase in the future.