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PRE-APPROVAL

Pre-approval will save you a lot of time since you will be able to focus exclusively on houses in your price range. You lender will be able to pinpoint a loan amount for which you qualify.

Mortgage pre-approvals also signal to the seller that you’re a serious buyer. Being prepared is particularly useful when making an offer on a house. If you intend to negotiate the deal, a pre-approval gives your offer a little extra gravity. Being ready to go can also help in a hot market where it’s not uncommon for sellers to entertain multiple, simultaneous offers. Sellers tend to focus on the path of least resistance: the buyer who is pre-approved.

2

PURCHASE AGREEMENT

When you’ve visited properties with your agent and picked out the home you want, it’s time to make an offer. Your real estate agent will know the ins-and-outs of how to structure it. It will include contingencies (or conditions) that must be satisfied before the deal is complete. Here are a few common ones:

Appraisals must come in close to the loan amount, not lower
Home inspections do not find major issues with the property
Borrowers obtain funding (final loan approval)

With terms of the deal approved by both parties, the purchase agreement (a binding offer) is signed by the seller and buyer. At this point, you can move forward to finalize the loan.

3

LOAN APPLICATION

A few documents are needed to get a loan file through underwriting. Some of the information will be gathered online or over the phone. While the list seams long, it won’t take much effort to round them up. Your loan officer will also indicate which items will not be needed and also help you prioritize which items to send in first. you will need to provide information on different subjects such as: employment, income, assets, debts, property information and financial blemishes. All the documentation pulled together to produce the Loan Estimate witch describes the terms and predicts the costs associated with your loan. A loan estimate is simply a statement of the terms and estimated fees in plain English. You will get a sense of the work that will be done and how much it’ll cost.

4

Loan processors gather documentation about the borrower and property, review all information in the loan file and assemble an orderly and complete package for the underwriter. They’ll open the file and get the following wheels in motion:

Order credit report (if not already pulled for a pre-approval)
Start verifying employment (VOE) and bank deposits (VOD)
Order property inspection if required
Order property appraisal
Order title search

LOAN

PROCESSING

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The underwriter is the key decision-maker. They closely evaluate all the documentation prepared by the loan processor in the loan package. They cross check to see if the borrower and property match the eligibility requirements of the loan product for which the borrower applied.

Underwriters review at the borrower’s credit history and their capacity to repay the loan. The collateral (the property) is also weighed into the decision. They verify information and double check for accuracy. With everything reviewed, the underwriter approves or rejects the loan. Sometimes underwriters approve the loan with conditions. Once any conditions are satisfied, the closing is scheduled.

UNDERWRITING

PROCESS

6

CLOSING

Documents are drawn, meaning they are printed out and sent to the title company (or attorney’s office) where the closing meeting takes place. You can expect a big stack of papers.

One of the documents worth calling attention to is the Closing Disclosure. It should look somewhat familiar. Think of it as the companion to one the first documents you received in the mortgage loan process, the Loan Estimate. The Loan Estimate gave you the expected costs. The Closing Disclosure confirms those costs.

The closing is the moment for which you’ve been waiting. It’s time to sign a bunch of documents and complete your purchase or refinance. Some docs seal the deal between you and the lender. Other docs seal the deal between you and the seller (if it’s a purchase transaction).

CONGRATULATIONS!