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Loan Process

Although these steps may seem daunting, our loan officers, processors, and associates will be with you every step of the way.

Pre-Qualification

Pre-qualification starts the loan process. Once a lender has gathered information about a borrower's income and debts, a determination can be made as to how much the borrower can qualify for and, more importantly, afford.

In attempting to approve homebuyers for the type and amount of mortgage they want, mortgage companies look at two key factors. First, the borrower's ability to repay the loan and, second, the borrower's willingness to repay the loan.

Ability to repay the mortgage is verified by your current employment and total income. Generally speaking, mortgage companies prefer for you to have been employed for at least two years in the same line of work.

The borrower's willingness to repay is determined by examining how the property will be used. For instance, will you be living there or just renting it out? Willingness is also closely related to how you have fulfilled previous financial commitments, thus the emphasis on the Credit Report and/or your rental payment history.

It is important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, your stronger point could make up for the weak one. Mortgage companies could not stay in business if they did not generate loan business, so it is in everyone's best interest to see that you qualify, provided that you and the lender assess yout qualifications accurately.

Required Documents

Providing the following documentation will expedite your loan approval process. Commonly requested documents include:

Past two (2) years W-2 statements
Pay stubs covering the last (30) thirty days
Two most recent monthly asset statements
Most recent transaction summary of 401K, IRA, or Mutual Fund Accounts
Copy of the purchase and sale agreement (purchases)
If you are currently renting....either 12 months canceled rent checks or the name and address of your current landlord
If divorced...a fully executed divorce decree
A letter of explanation for any known credit problems
For self employed borrowers, employed in sales, paid by commission, or owning rental real estate:
Two (2) years signed personal tax returns - including all schedules
If self-employed through a corporation, last two years corporate returns as well as a year-to-date profit and loss statement and balance sheet

If you are not a US citizen, provide a copy of your green card (front and back), or if you are NOT a permanent resident provide your H-1 or L-1 visa.

If you are applying for a Home Equity Loan you will need, in addition to the above documents, to provide a copy of your first mortgage note and deed of trust. These items will normally be found in your mortgage closing documents.

Different programs require varying amounts of documentation. The loan program you select may require more or less documentation. Please contact us for a free, no-obligation consultation.

Mortgage Programs and Rates

To properly analyze a mortgage program, the borrower needs to think about how long he plans to keep the loan. If you plan to sell the house in a few years, an adjustable loan may make more sense. If you plan to keep the house for a longer period, a fixed loan may be more suitable.

While there are not as many loan choices as there were a few years ago, the loan process can still be a challenging one because of tough lending standards. An experienced mortgage professional can evaluate a borrower's situation and recommend the most suitable mortgage program, thus allowing the borrower to make an informed decision, and then navigate the lending process to achieve the borrowers goal.

The Application

The application is the true start of the loan process and usually occurs between days one and five of the start of the loan process. With the aid of a mortgage professional, the borrower completes the application and provides all Required Documentation.

The various fees and closing cost estimates will have been discussed while examining the many mortgage programs and these costs will be verified by the Good Faith Estimate (GFE) and a Truth-In-Lending Statement (TIL) which the borrower will receive within three days of the submission of the application to the lender.

Processing

Once the application has been submitted, the processing of the mortgage begins. The Processor orders the Credit Report, Appraisal and Title Report. The information on the application, such as bank deposits and payment histories, are then verified. Any credit derogatories, such as late payments, collections and/or judgments require a written explanation. The processor examines the Appraisal and Title Report checking for property issues that may require further investigation. The entire mortgage package is then put together for submission to the lender.

Appraisal Basics

An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.

Using three common approaches, which are all derived from the market, derives the opinion, or estimate of value. The first approach to value is the COST APPROACH. This method derives what it would cost to replace the existing improvements as of the date of the appraisal, less any physical deterioration, functional obsolescence, and economic obsolescence. The second method is the COMPARISON APPROACH, which uses other 'bench mark' properties (comps) of similar size, quality and location that have recently sold to determine value. For owner-occupied homes, the comparison approach is given most weight. The INCOME APPROACH is used in the appraisal of rental properties and has little use in the valuation of single family dwellings. This approach provides an objective estimate of what a prudent investor would pay based on the net income the property produces.

Underwriting

Once the processor has put together a complete package with all verifications and documentation, he/she serves preliminary approval using specific automated underwriting systems (AUS). Once this approval is obtained the file is sent to the lender. The underwriter is responsible for determining whether the package is deemed an acceptable loan by validating the AUS results and determining if other issues need to be addressed. If more information is needed, the loan is put into 'suspense' and the borrower is contacted to supply more information and/or documentation. If the loan is acceptable as submitted, the loan is put into an 'approved' status.

Closing

Once the loan is approved, the file is transferred to the closing and funding department. The funding department notifies the broker of the approval and verifies closing fees. The escrow agent/title insurance company then schedules a time for the borrower to sign the loan documentation.

At the closing the borrower should:

Bring a cashiers check for your down payment and closing costs if required. Wire transfers are also acceptable. Personal checks are normally not accepted and if they are they will delay the closing until the check clears your bank.
Review the final loan documents. Make sure that the interest rate and loan terms are what you agreed upon. Also, verify that the names and address on the loan documents are accurate.
Sign the loan documents.
Bring identification and proof of insurance.

After the documents are signed, the escrow agent returns the documents to the lender who examines them and, if everything is in order, arranges for the funding of the loan. Once the loan has funded, the escrow agent arranges for the mortgage note and deed of trust to be recorded at the county recorders office. Once the mortgage has been recorded, the escrow agent then prints the final settlement costs on the HUD-1 Settlement Form. Final disbursements are then made.

Contact one of our experienced Loan Officers today to discuss your particular mortgage needs or Apply Online and a Loan Officer will promptly get back to you.