Loan Process

Buying a home is a big decision, the more prepared you are, the less stressful the process will be.

Pre-Qualification

Please refer to the Helpful Information page for details.

Mortgage Programs and Rates

With so many programs to choose from, each with different rates, points and fees, an experienced mortgage professional can evaluate a borrower's situation and recommend the most suitable Mortgage Program. Thus allowing the borrower to make an informed decision.

The Application

The application is the true start of the loan process. The borrower completes the application and provides all required documentation. The various fees and closing cost estimates (Loan Estimates) will be discussed.

Processing

Once the application has been completed, credit report, appraisal and title report will be ordered. The information on the application, such as bank deposits and payment histories, are then verified. Any credit derogatory, such as late payments, collections and/or judgments, might require a written explanation. The entire mortgage package is then put together for submission to the lender.

Required Documents

Please refer to the Application Checklist page for required documents.

Credit Reports

A credit profile refers to a consumer credit file, which is a picture of how you paid back the companies you have borrowed money from, or how you have met other financial obligations. There are five categories of information on a credit profile:

• Identifying Information.
• Employment Information.
• Credit Information.
• Public Record Information.
• Inquiries.

NOT included on your credit profile is race, religion, health, driving record, criminal record, political preference, or income.

Credit scoring is a statistical method of assessing the credit risk of a mortgage application. The score looks at the following items: past delinquencies, derogatory payment behavior, current debt levels, length of credit history, types of credit and number of inquires.

The three main credit Bureaus: Equifax, Experian, and TransUnion.

The followings are some of the ways you can improve your credit score:

• Pay your bills on time.
• Keep Balances below 30% on credit cards.
• Check your credit report once a year to insure the information is accurate.
• Be conservative in applying for credit and make sure that your credit is only checked when necessary.

If you have had credit problems, be prepared to discuss them honestly with a mortgage professional who will assist you in writing your "Letter of Explanation." Knowledgeable mortgage professionals know there can be legitimate reasons for credit problems, such as unemployment, illness or other financial difficulties.

A borrower with a score of 680 and above is considered an A+ borrower. A score below 680 may indicate underwriters will take a closer look in determining potential risk.

Appraisal Basics

An appraisal of real estate is the valuation of the rights of ownership.

The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.

Underwriting

Once the completed application package is sent to the lender, the underwriter is responsible for determining whether the package is deemed an acceptable loan. If more information is needed, the borrower will be contacted to supply more information and/or documentation. If the loan is acceptable as submitted, the loan is put into an "approved" status.

For potential buyers that have yet to identify a property, the completed application with supporting documentation will be submitted to the lender for a pre-approval.

Closing

Once the loan is approved, the file is transferred to the closing and funding department. The funding department notifies the broker and escrow of the approval and verifies broker and closing fees. Escrow then schedules a time for the borrower to sign the loan documentation.

At the closing the borrower should

• bring a cashiers check for your down payment and closing costs if required. Personal checks are normally not accepted and if they are they will delay the closing until the check clears.
• review the final loan documents. Make sure that the interest rate and loan terms are what you agreed upon. Also, verify that the names and address on the loan documents are accurate.
• sign the loan documents.
• bring identification and proof of insurance. After the documents are signed, escrow returns the documents to the lender who examines them and, arranges for the funding of the loan. Once funded, escrow arranges for the mortgage note and deed of trust to be recorded at the county recorders office. After recording, escrow then prints the final settlement form. Final disbursements are then made.

Summation

A typical "Good Credit Borrower" mortgage transaction takes between 14-30 business days to complete. Contact me today to discuss your particular mortgage needs!