Here is a synopsis of how the loan process works:
1 - Initial Discussion: Discuss your needs and goals with a loan specialist.
2 - Application and Disclosures: Complete the loan application and required disclosures, signed by you as per legal requirements.
3 - Documentation Submission: Provide income and asset documentation for verification purposes.
4 - Credit Analysis: Obtain a credit report, addressing any derogatory items that may need attention.
5 - Loan Options: The loan specialist compiles and analyzes the information to find suitable loan options based on your needs.
6 - Pre-Approved Loan: Receive a pre-approved loan document indicating the maximum value for purchasing a property.
7 - Property Selection: With the pre-approved loan, you and your Realtor choose a property.
8 - Information for Selected Property: The loan specialist provides information for the chosen property.
9 - Loan Processing: Submit the loan package for processing, involving verifications, title search, and appraisal. The processor prepares the loan file for the underwriter's review. Additional documentation may be requested during this stage.
10 - Homeowner's Insurance: The borrower contacts an insurance company for hazard insurance coverage, preferably starting at least two weeks before closing. The chosen company's details must be forwarded to the mortgage company for policy preparation before closing.
11- Underwriter's Role: The underwriter plays a crucial role in approving or declining loans by analyzing a borrower's finances to assess risk for the lender. Their approval depends on meeting program guidelines and demonstrating financial stability. A conditional approval may be granted, listing any remaining requirements, or a denial may be issued if the file is deemed too risky.
12 - Property Appraisal: An appraisal is conducted to determine the fair market value of the property being bought or refinanced. The appraiser verifies physical characteristics and compares the property to similar ones sold in the area within the past year. The cost typically ranges from $300 to $400, paid in advance.
14 - Title Insurance: After clearing title issues, title insurance may be issued to protect the owner and mortgage company against property claims.
15 - Closing: Once the underwriter approves the loan, and title search and appraisal are satisfactory, a closing can be scheduled.
