"Pre-Approval" occurs before the loan process actually begins, and is usually the first step after initial contact is made. In a pre-approval, the lender gathers and enters information about the income and debts of the borrower and makes a financial determination about how much house the borrower may be able to afford. The lender accomplishes this by submitting your electronic file to an automated underwriting system, through either Fannie Mae’s or Freddie Mac’s on-line system. Different loan programs may lead to different values, depending on whether you are qualified for them, so be sure to get a pre-approval for each type of program you are suited for.
The "application" is actually the beginning of the loan process. Most of the application is completed as a function of the pre-approval, except the lender doesn’t know the exact property address or tax rate at that stage. As soon as he or she enters the new property address, your application is complete. This usually occurs within 24-48 hours of receiving a copy of the executed contract. The buyer, now referred to as a "borrower", completes the application process, by signing all the relevant application and disclosure forms, and supplying all of the required documentation for processing. Various fees and down payments will be discussed at this time, and the borrower will receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) which itemizes the rates and associated costs for obtaining the loan. You are also now be eligible to “lock in” your interest rate and fees!
Processing occurs between days 3 and 15 of the loan. At this time the lender orders a property appraisal, orders title insurance, and mails out requests for verifications. If necessary, they may also send for verification of employment (VOE) and bank deposits (VOD) at this time. All information supplied by the borrower is reviewed at this time and a list of items not yet received is compiled. The "processor" reviews the credit reports and verifies the borrower's debts and payment histories If there are unacceptable late payments, collections or judgments, etc., a written letter of explanation is will be required from the borrower. The processor also reviews the appraisal and survey and checks for property issues that may require further steps be taken.
The processor's job is to put together an entire package that may be sent to the underwriter for final approval.
"Underwriting" occurs between days 15 and 25. The underwriter is responsible for determining whether your package of loan documentation submitted by the processor meets the loan program’s guidelines. If more information is needed, the loan is put into "suspense" and the borrower is contacted to supply the additional documentation.
"Mortgage insurance underwriting" occurs when the borrower has less than 20% of the loan amount to put towards a down payment. At this time, the loan package is submitted to a private mortgage guaranty insurer, who provides insurance coverage to the lender in case of default. As above, if more information is needed the loan goes into suspense. Otherwise it is usually returned back to the mortgage company within 48 hours.
Closing usually occurs between days 25 and 45 of the loan. At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the title company. The title company’s job is to make sure both the buyer and seller sign all the necessary closing forms and disclosures. In addition, they also handle the exchange of title to the property, and receipt and disburse all funds to the appropriate parties. This is the point at which the borrower finishes the loan process and actually completes the purchase of the house.
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.
If you are interested in receiving more information about our services please let us know. If you wish to apply for a loan online please visit our loan application page. If you wish to apply via fax/phone, please visit our contact page and we will follow up with the information that you have requested.