9 Steps to a Mortgage

The mortgage process cant be confusing - we get it! Documents, paperwork, back-and-forth. So much to process through. To give you a more clear picture of what’s coming up after you find your dream home, check out 9 key steps to expect while obtaining your home loan.

Let’s begin at the beginning, which is submitting an application.

Step One: Submitting an Application

Your mortgage application will contain a majority of the important information we need to move forward with your loan. This includes information about you, your financial situation, employment history, ect. You will also provide information about the specific property you will be purchasing in your application.

You can complete a mortgage application online, in-person or over the phone.  Here is an easy link to begin the mortgage process.

Step Two: Qualification

The next step is to see how much you qualify for. The process here depends on your situation.

Buying a Home

If you are buying a home, we can provide a prequalification or preapproval letter so that you know how much money you can borrow so you can go out and look at homes.   

Refinancing a Home

When you refinance an existing mortgage you may be simply wanting to change the terms of your loan to a lower rate or get a fixed rate mortgage if you are currently in an Adjustable Rate Mortgage otherwise known as an ARM.   Or, you may want to take money out, which is called a Cash Out mortgage.  Whatever you want to do, you will need to know how much you qualify for.

Whether you are buying or refinancing, we will ask you some initial questions like, how much you earn, how much you have in savings, how much do you owe on your credit cards, cars, etc.  This will help them us find out what programs are available for you and how much you may qualify for.

Step Three: Documentation

You will begin this step by sending in your documentation. There are three main categories of documentation: Proof of identification, proof of income, proof of expenses.  Think of things like W2, drivers license, tax returns, ect.  We will tell you exactly what we need and make sure it is a simple process for you to send to us.

Step Four: Disclosures

Once you have given the initial information, we will send you paperwork that is called disclosures. The disclosures are called a Loan Estimate and will include all of your costs of the loan. 

The Loan Estimate is a 3-page document that details the costs associated with the mortgage loan.

It is important to review the disclosures and let us know if you have any questions.  One important note: You must let us know that you have received the disclosures and are ready to move ahead.  This is called an Intent to Proceed, which is the next step.

Step Five: Intent to Proceed

The Intent to Proceed is usually completed electronically, which means that you are ready to move ahead in the process to the next step, which is ordering the appraisal.

Step Six: Ordering the Appraisal

Once you electronically sign the initial paperwork, your home appraisal will be ordered.  Some loan types allow for an appraisal waiver and if you were fortunate to receive this, then we will not need to order an appraisal.  The first step in getting your appraisal will be setting the appointment for the appraiser to come and inspect the home.  The appraiser will call you to set a time that is convenient to inspect your home.  If you are buying a home, your agent will be contacted to set the appointment.

Step Seven: Processing

Once your appraisal is ordered your loan file will move on to the next stage, which is gathering and reviewing any missing documentation. On this step you may work directly with the Processor who will be handling your loan file.  The Processor will review the documentation you have submitted to ensure that the file is complete. 

The Processor’s job is to be a liaison between you, the Loan Originator and the Underwriter assigned to the loan file. The Processor looks for proper calculations to ensure the Debt-To-Income (DTI) on the loan is accurate, and orders flood certifications, mortgage payoffs, and various other documents.

Step Eight: Underwriting

Once the Processor has received all documentation necessary to support the information in a loan file, they submit the loan to the Underwriter for approval. 

In most cases, after underwriting, an “initial approval” or a “conditional approval” will be issued. This means that the file is approved, but the approval is subject to certain conditions.

We will let you know if there is anything else we need from you.

In this stage, time is of the utmost importance, so if we contact you for additional information, you will want to be sure to respond in a timely manner so that your loan file keeps moving along.

It is the Underwriter’s responsibility to ensure that every loan meets the lender/investor’s required guidelines. The Underwriter reviews the validity of the appraised value, calculates the income used for the loan, and runs various loan fraud checks. If questions arise during this review, the Underwriter will request follow-up documentation as needed.

Communication

In a purchase transaction, many moving parts must come together at the same time for the file to proceed to a smooth close. Sellers, buyers, real estate agents, and title companies or attorneys all have tasks and responsibilities that must be coordinated. It is very important for us to remain in close contact with all involved parties, and to make sure each one is aware of any potential pitfalls or delays that may arise.

Step Nine: Closing 

Once the file has been given the “Clear to Close” by the underwriting department, it moves to the closing department.

In a refinance transaction, closing is scheduled with you, the borrower, and we will inform the title company and closing department of the requested time and date.

In a purchase transaction, the closing date is negotiated between the buyer and the seller of the property, and that date is included in the sales contract.

Once the title company receives closing instructions, we will work with the title company to prepare the Closing Disclosure.

The Closing Disclosure must be received by the borrower(s) at least 3 business days prior to “consummation”.  This typically is you sign your final closing documents.  It’s important that you acknowledge receiving your Closing Disclosure immediately.  We will work with you and let you know when to expect your Closing Disclosure and how to acknowledge it. This is important because there is a three day waiting period between the time you acknowledge receiving the Closing Disclosure and the time you can actually sign and close on your home loan.