The Mortgage Loan Process

1. Getting To Know You And Getting You On Track

The first meeting in our mortgage loan process gives us an opportunity to get to know you better, answer the questions you have about the financial aspects of your real estate transaction, and make you aware of the variety of programs we can offer to best fit your situation. We also provide you with a list of documents that you’ll need to gather in order to move forward with the approval process, which include:

• Two forms of ID (driver’s license, social security card, passports, etc.)
• Pay studs from the past 30 days
• W2 documents from the past 2 years
• The name and address of all employers for the past 2 years
• If you are self-employed, a profit and loss statement for the current year and tax returns for the previous two years
• Bank statements for the last two months (including checking, savings, mutual funds, money markets, 401K, or other retirement funds)
• Proof of additional income (if applicable)
• Copies of titles to any vehicles that are paid in full
• Divorce decree and separation agreements (if applicable)
• A list of all your monthly debts not listed on your credit report
• Your residential address for the past 2 years, including the name and address of all landlords during that time
• Information on any real estate you already own

Download our convenient Mortgage Documents Checklist so that you can easily keep track of all the documents you need.

2. Getting Qualified

The next step in our mortgage loan process is applying for pre-qualification. This serves as a good indication of your general creditworthiness to potential sellers and can usually happen very quickly. Pre-qualification allows us to confidentially verify your:

• Credit
• Income
• Assets
• Liabilities

Verifying the above elements of your finances helps us determine how much you can afford to spend on a home. Pre-qualification in general helps us put you in a stronger position for negotiating, which, as a result, helps you close as quickly as possible.

3. Assessing Loan Programs & Rates

At this point in our mortgage loan process timeline, we’re beginning to sort through and evaluate a variety of loan programs available to you — basically, figuring out which mortgage best fits your needs. This is where we help you accomplish the following:

• Choose the lifespan of your loan
• Understand the relationship between rates and points so you can make an informed decision
• Calculate risks and rewards in the pursuit of your real estate goals

You will receive a loan estimate and state and federal disclosures, which tells you important details about the mortgage loan you have requested, such as the estimated interest rate and monthly payment. It’s also important to review your loan estimate to make sure it accurately reflects what you discussed with your lender.

At the time of your loan application, you will want to lock in your interest rate and loan terms for a specific amount of time — usually 30, 45, or 90 days. Locking in a rate protects you in case the rate increases, which can occur daily and even hourly.

4. Obtaining Loan Approval

When you submit an application for a loan, we work with our lenders to determine certain things about you. This includes:

• Income
• Stability of your employment
• Amount of other debts you currently have
• Affordability of your new mortgage payment
• Source of your down payment
• Past credit history
• Value of the property you would like to purchase or refinance

Using this information, we work to get you the best rate and most favorable terms possible. Within three days of applying, you will receive a loan estimate and state and federal disclosures. These documents will itemize the rates and mortgage fees associated with your loan, including inspections, title insurance, and taxes, so you know exactly what you are getting into.

5. Narrowing Down Your Borrower Conditions & Preparing for Closing

The borrower conditions include the interest rate and the principal amount, the lender’s intent to finance the borrower, and other conditions on how you intend to use the loan.

When you’re ready to put down an offer on a house, you will want to lock in your interest rate and loan terms for a specific amount of time — usually 30, 45, or 90 days. Locking in a rate protects you in case the rate increases, which can occur daily and even hourly.

You will also receive a loan approval letter from the lender. This will likely include some conditions, such as:

• Supplementary documentation: If you aren’t able to provide credit history (and subsequently a credit score), you may be asked to provide proof of utilities, cable, etc. You may need to provide statements from a licensed Certified Public Accountant if you’re self-employed or have another source of income.
• Explanation of irregularities: You may be asked to explain variations in your credit report. You may also have to obtain an official explanation of tax statements, pay stubs, etc.
• Verification: You may be asked to verify your employment and income and housing or rental history.

6. Closing the Loan

We can prepare for closing once the lender has reviewed all the conditions of the loan approval and we have answered all of your questions and you feel confident to proceed.

The following is what you can expect to occur at closing:

• You sign the paperwork to take ownership of your home if you are purchasing, or transfer your home loan if you are refinancing.
• You will receive a settlement statement that details all of your expenses related to the transaction, as well as how your loan proceeds were distributed.
• You will also receive a title policy that insures your ownership of the property.

A few days before you close, you’ll receive a closing disclosure to review and sign, which outlines all the information, including much money you need to bring to closing. You will be responsible for the down payment and closing costs, which include an application fee, attorney fees, origination fees, and more. Closings costs are usually about 2-5% of the loan value.