| Pre-Qualification
Pre-qualification occurs before
the loan process actually begins,
and is usually the first step after
initial contact is made. The lender
gathers 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. Different loan
programs may lead to different values,
depending on whether you are qualified
for them, so be sure to get a pre-qualification
for each type of program you are
suited for.
Application
The application is actually the
beginning of the loan process and
usually occurs between days one
and five of the loan. The buyer,
now referred to as a "borrower",
completes a mortgage application
with the loan officer and supplies
all of the required documentation
for processing. Various fees and
down payments are discussed at this
time and the borrower will receive
a Good Faith Estimate (GFE) and
a Truth-In-Lending statement (TIL)
within three days that itemizes
the rates and associated costs for
obtaining the loan.
Processing
Processing occurs between days 5
and 20 of the loan. The "processor"
reviews the credit reports and verifies
the borrower's debts and payment
histories as the VODs and VOEs are
returned. If there are unacceptable
late payments, collections for judgment,
etc., a written explanation is required
from the borrower. The processor
also reviews the appraisal and survey
and checks for property issues that
may require further discernment.
The processor's job is to put together
an entire package that may be underwritten
by the lender.
Underwriting
Lender underwriting occurs between
days 21 and 30 or sooner. The underwriter
is responsible for determining whether
the combined package passed over
by the processor is deemed as an
acceptable loan. If more information
is needed, the loan is put into
"suspense" and the borrower
is contacted to supply more documentation.
Mortgage Insurance
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 is submitted to a
private mortgage guaranty insurer,
who provides extra insurance 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.
Pre-Closing
Pre-Closing occurs between days
25 and 30. During this time the
title insurance is ordered, all
approval contingencies, if any,
are met, and a closing time is scheduled
for the loan.
Closing
Closing usually occurs between days
25 and 45 of the loan (depending
upon the designated length of your
escrow). At the closing, the lender
"funds" the loan with
a cashier's check, draft or wire
to the selling party in exchange
for the title to the property. This
is the point at which the borrower
finishes the loan process and actually
buys the house.
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