Below is an overview of a typical purchase mortgage loan process. Depending on the type of loan you are applying for: Conventional, Jumbo, FHA, VA, Condos, Manufactured Homes, this process may vary. It’s meant to give you an overview of what to expect and what transaction milestones you’ll need to complete during the loan approval process.
We also have created the dos & don’ts during the loan process information page.
A thorough Pre-Approval Process completed up-front, before you enter into a contract is the singular most important step you can proactively take to ensure a smooth loan process.
There is a difference between getting “Pre-Qualified”–which is a verbal conversation about qualifying for a loan VS. getting “Pre-Approved”–which requires a review of income, asset, credit, and other qualifying information to give you a true and accurate measure of your ability to qualify for the loan & to be quoted accurate rates and term/program.
Finding a Home & Signing a Purchase Contract
Here are some recommendations:
- We recommend you get a good realtor. A strong realtor will not only help you find the right home but will put the purchase contract together for you properly.
- Know the important dates/milestones of your contract.
- IMPORTANT – Get your Mortgage Banker’s input as to the significance of and how reasonable it will be for you to meet these dates prior to signing your contract.
- Application for Financing
- Home Inspection
- Financing Approval–Mortgage Commitment Date.
- It is especially important to keep track of this date during the loan approval process. The Mortgage Commitment Date is the date that required to have your financing approved. After this date, if you cancel the contract, you might not get your deposit back.
- Closing Date
Sign Loan Disclosures & Initiate the Loan Process
After you have a signed contract, you can officially begin the approval process for your loan.
- The first step is to sign the loan application disclosures.
- Affiliated Mortgage provides these disclosures to you electronically. We must have a specific email address for all borrowers.
- E-Sign is a quicker, more efficient and accurate manner to sign your loan application.
- We will require the appraisal to be paid to the appraisal management company when the appraisal is ordered, so we will need a credit card authorization form completed. The cost will range from $450 to $700 depending on the property and loan type. This will be quoted upfront with the closing costs.
Submission of the Application Package to the Loan Processor
After you have signed your application, your Loan Officer will work with you to gather all your credit approval documents such as tax returns, pay stubs, bank statements, to submit the loan to the Loan Processor. It is important that you gather the required documents quickly and completely at this stage of the process. Disorganization or delays at this step can lengthen out the loan process. The cleaner and more complete the file, the better.
- The Loan Processor will then review your documentation and prepare the loan package for review by the Underwriter.
- If an updated bank statement is requested, make sure that all pages of the statement are included (i.e. If the statement reads Pg. 1 of 6, double-check that all 6 pages of the statement are supplied, even if they are blank).
- If a clear ID document is requested, make sure that the scanned/copied image is visible. This can be done by taking a picture with your cellphone.
- Also, ensure that the docs copied/scanned fit within the margins and are not cut off.
Submission to Underwriting
- The Loan Processor will next submit the loan to the Underwriter.
- The length of time it will take for underwriting to review your loan will depend on the type of loan but it is typically between 24 – 72 hours.
- Your Mortgage Banker will consult with you on current turn-times when you are getting ready to submit your loan to underwriting.
Conditional Approval/Underwriting Conditions
Once the Underwriter has reviewed and approved your loan, the Loan Processor will send you a list of any additional items that need to be satisfied prior to closing your loan. These are called “Underwriting Conditions”. You will gather these items similarly to how you gathered items after the Processor reviewed the loan file.
The Loan Processor will coordinate with all parties to order the appraisal order, title & insurance.
Select an Insurance Agent.
This is an important part of the Underwriting process as the annual cost of the insurance is a component of your total monthly housing cost & impacts your closing costs. Therefore, the insurance agent selection should be completed as early in the process as possible.
Review of Underwriting Conditions
Once you have gathered all the items requested by the Underwriter, your Processor will review them to confirm that they match what the Underwriter has requested & determine whether we should provide any additional information to support or facilitate approval of your loan.
Updated Worksheet Estimating Closing Costs & Cash-To-Close
You will be provided an updated transaction worksheet detailing closing costs and cash-to-close at this point and prior to resubmitting the loan to underwriting for final approval.
Check the Updated Closing Cost & Cash-To-Close worksheet carefully for:
- Interest Rate
- Loan Program: Fixed, Arm, etc.
- Loan Term: 30 year fixed, 15 years, etc.
- Tax and Insurance Escrows:
- Are they being waived?
- Or are taxes and insurance paid as part of your monthly payment with the lender to disburse when due (annually)?
- Deposits on the Purchase Contract
Lender & Seller Credits:
- Are all lender or seller credits included in the closing statement provided to you?
- If not, it is very important that you review this with your loan officer as the Investor must approve any deposits.
Total Estimated Monthly Payment & Cash-To-Close:
- Review the total estimated monthly payment and cash-to-close
Once your Loan has been given final approval from the Underwriter, it will be forwarded to the Closing Department. Our Closer will review the Updated Closing Statement that you approved in the previous step and will coordinate with the Title Company and Lender to prepare the final closing statement and closing documents. The closing disclosure will be sent to you via email at least 3 days prior to closing. It is imperative that you open the email immediately to start the clock. If not electronically signed, then we must wait 7 days until we are able to close.
Closing Best Practices
- The title company will require a government-issued picture ID for each person signing at closing.
- Any person on the title will need to sign documents at closing. Please ensure that all parties on the title will be present at the closing.
- Non-borrowing spouses will be required to sign the mortgage on any primary home and most second home transactions. Please coordinate so that they are present.
- Transfer of Funds/Cash-Due-At-Closing.
- Please coordinate with your contact at the title company to arrange the transfer of the funds at closing. The title company will not accept personal or cashier’s check and will only accept wire transfers. They will provide you with the wire instructions. Please allow ample time for the funds to transfer.