THE LOAN PROCESS

Prequalification

Prequalification occurs before the loan process actually begins. The Loan Officer gathers information about your income, debts, employment, bank accounts, past credit references and confirms your ability to repay the loan you are requesting 


It's a good idea to know how much of a home you can afford before you start shopping for one!   If you are refinancing the loan on your existing home, then the prequalification process should help you decide whether refinancing is a good idea for you.  As with you, the investor wants to see if there is any cost that you can recoup within 24 months and that you new payment is lower.  
 

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Application

The application is the beginning of the loan process and either occurs after you have found a property you want to buy or have determined that you wish to refinance the loan on your existing home. You can apply for and get approve for a loan without actually choosing a property, this is done through one of our processes call Approved TBD's.  You complete a mortgage application for a particular loan program and supply all of the required documentation for processing. Various fees (if applicable) and down payment options are discussed at this time. As required by regulation the loan officer will deliver a Loan Estimate (LE) and an Itemization Worksheet, FACT ACT Disclosure and a Service Disclosure within three days that itemize the rates and estimated costs for obtaining the loan.  Once the Loan Officer has received all the documentation required by the lender your loan will be submitted for approval.

 

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Processing of your Estimated Loan

The lender will typically submit the application package to an automated underwriting system (DU/LP) that will provide the lender with the necessary documentation needed for loan approval. In some cases, the lender may also manually underwrite an application package.


The lender's processor reviews the credit reports and documentation to verify your employment, debts and payment histories. If there are unacceptable late payments, collections, judgments, etc., the processor may requests a letter of explanation (LOE) from you. The processor also reviews the appraisal and survey (if applicable) and then checks for property issues that may affect final loan approval. The processor's job is to put together an entire application package for the lender's underwriter.
 

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Underwriting

The lender's underwriter is responsible for determining whether the application package prepared by the processor meets all the lender's criteria. If more information is needed, the underwriter will inform the processor and you will be contacted if necessary.  The information requested may be from one of the third party companies involved in the transaction, ie Appraiser, Survey Company, Title Company, Inspector, etc.


If the underwriter approves the loan, the lender issues a conditional commitment to lend,  works with you to clear all conditions to its commitment to lend and then schedules a closing time. Conditions to the lender's commitment may include issues with credit, income, or the property that may arise during the processing and underwriting process.
 

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Closing

The closing will occur after all conditions are cleared and the lender issues a full loan approval or a Clear To Close. At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the closing agent, who disburses funds, in exchange for the title transfer to the property. This is the point at which you finish the loan process and actually refinance or buy the house, subject to the lender's loan. Closings occur at different places in different states. For instance, some states require that the closing take place at a closing attorney's office, while others use a title or escrow company. You may also be able to close at your home.

On a purchase, this is when you receive your keys to your new home, if this is a refinance there is a 3 day right of recession.  Once those 3 days have passed, you will receive any funds due you from the HUD.


 

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