1. Loan Application and pre-Qualification
Step one is to complete a full loan application. Once received a mortgage banker will help explain different financing options that are best suited for your goals. This begging stages of the process does not guarantee an approval for a mortgage however it does provide the knowledge required to set realistic expectations in respect to spending limits.
2. Documentation & pre-approval
Financial documents supporting the mortgage application must be submitted and verified by underwriters. Documentation commonly requested but not limited to includes 30 days of pay stubs, 2 years of complete tax returns, 2 years of W’2s, and 1099’s photo ID’s all applicants, current checking and saving account statements, and recent retirement/investment account statements. If you have experienced a divorce or bankruptcy supporting documentation will be required. Be sure not to make any changes to your employment or income if at all possible, This will result in increased documentation and will greatly affect your ability to get a loan.
3. Home shopping
Ahhh the fun part! Once your pre-approval is in place you can begin the process of shopping for your dream home! You would want to consult with your realtor about your needs and they’ll prepare a list of available inventory that suits your search criteria. When the perfect home is located, your realtor will present your offer to the seller.
4. Began loan process
When all parties have agreed to the terms of the sales contract, you will meet with your Mortgage banker to discuss the different financing options you may qualify for. When the type of mortgage and term has been determined, you will sign the loan application and the loan estimate. This document is not 100% accurate in the early stages, however, it does provide you with a realistic picture of your transaction.
A mortgage underwriter’s job is to assess the risk of lending you, the applicant, money to purchase your home. They will consider factors such as credit history, employment history and income, and your ability to repay when determining if they will approve your loan or not.
6. Inspection & Appraisal
Your realtor will recommend a capable home inspector to conduct a thorough inspection of the property . The inspector will check for any structural and or material defects in the property and provide a written report, the realtor can submit a building resolution document that request the seller to correct the deficiencies or provide credit for the repairs at closing. The appraisal report is required by underwriting as it provides a collateral assessment of the property, assuring the lender that the property value is commensurate with the purchase price.
7. Conditional Approval
After the initial documentation has been collected and the appraisal report has been. issued, the file is submitted to an underwriting team for review. Typically on the first review, the underwriter will issue an “approval” but with some conditions. These “conditions” are items that the underwriter needs additional clarity on. Once these conditions are met, the final approval will be issued.
8. Final Approval
The Final approval is issued when all documentation has been signed off on by underwriting. It is imperative that this final approval date is met prior to your loan commitment date on the sales contract. Since this milestone is time sensitive, staying motivated and providing all requested information will allow us to meet the designated date of loan commitment and prevent any delays or extensions.
The loan closing appointment typically occurs at a Title Company and represents the time when all buyers sign the final loan and title documents. This will include the transfer of title and all recording instruments that show YOU as the new owner!