The mortgage process typically happens during 5 major phases of the home buying process:
The application process is simple. You will be given information for secure and private platform where you can fill in the requested information as well as upload any required documents. This platform helps you organize and store your application information. It is so simple you can apply from any location at your convenience. If you must step away from your application and resume later, all your information will be securely stored.
Everything, especially the mortgage underwriting process, depends on the loan application. You can improve your chances of an accurate approval dramatically by providing the requested documentation. If you loan application has erroneous or incomplete information, our team will not have the tools they need to issue your approval.
Mortgage Pre-Approval Process Explained
Once your credit is pulled, lenders usually run the application and credit report through an automated pre-approval system like Fannie Mae (desktop underwriter) or Freddie Mac (Loan Prospector). These systems provide a mortgage pre-approval within minutes. A solid pre-approval tells a buyer which items are required for full underwriting approval and closing. Plus, it allows a buyer to start the home shopping process.
A very common request from a home seller is a mortgage pre-approval letter. Sellers want to know that you have the financial means to move forward with financing their home. This matters to you as well. Why look at homes without knowing how much you can finance?
Just remember, for the best and more accurate pre-approval findings, it still starts with a complete and precise application. This part is on the buyer and the loan officer. The better this small team works together, the better the results.
When you are armed with a preapproval, you can begin shopping for your new home. During the shopping process, you will:
- Meet with your real estate agent
- Make your wish list
- Begin touring homes
- Make an offer on a home
Once your offer is accepted, your home is officially “under contract”, and the mortgage professionals move forward with processing your loan.
Once your home is “under contract”, it’s time to schedule an appraisal. This is important to move forward with the mortgage process.
However, the loan program guidelines will dictate what inspections are necessary. For instance, government loans like USDA, VA, and FHA have more safety and condition required than conventional appraisals.
Additionally, government programs require water or septic inspections when applicable.
Finally, if the buyer uses a VA loan for the purchase, a termite inspection is required.
Although the above are required inspections, they are also great resources for you as the future owner of the property. Please see our preferred vendors (link to page on our website) to see the different inspections your future property can have and who we recommend.
The underwriting process involves comparing the borrower’s application, credit card, and documentation to loan program guidelines. The underwriter will examine the fine details of your application to confirm that you are prepared for loan approval.
Underwriting Clear to Close
This is what everyone wants to hear. We have final underwriting approval and clear to close. Final underwriting approval means any underwriting stipulations have been satisfied. The earlier this can happen, the better.
Once the underwriting “clear to close” is received, your loan is in the hands of our closing department and your settlement company. The settlement company may be a closing attorney or title company. In addition to the other processes, closing also involves a series of steps.
- Insurance binder finalized
- Review invoices
- Set closing date
- Prepare closing documents
- Final verbal verification of employment
- Coordinate with a settlement company
As always, stay in close contact with your loan officer and title agent during this phase. Additionally, make sure to coordinate with your insurance agent and finalize your homeowner’s insurance policy. A home insurance policy is required for a lender to send the closing package. Best practices include taking care of insurance very early on or at least having the quote and application completed.
At this stage, the closing disclosure must be provided to all borrowers at least three business days before closing. The initial closing disclosure usually does not have final, accurate figures yet. However, while the above listed steps are performed, the final figures are completed. Then, the closing package is sent to the settlement company.
Prepare for Closing Day
On the day of closing, all required signors should bring an ID and any necessary funds. The settlement company representative explains closing documents and the borrower(s) sign. If it is just a notary closing, ensure that your loan officer, realtor, or settlement company explains the documentation.
Once signed, the funding process takes over. We send funds to the settlement company. After the settlement company obtains the funds and the OK, the deed and mortgage is recorded. That’s when the property is officially in the buyer’s name, and the mortgage is owed. At this moment, the mortgage process is complete.
Hopefully, this has shed some light on what goes on behind the scenes before becoming homeowner. Now that you’re familiar with the mortgage process steps, you will know exactly what to expect and how to prepare. We are just a click away when you are ready to start your mortgage journey.