A TYPICAL FLOW OF A MORTGAGE:
After obtaining information about the borrowers' income, assets, monthly debt & expenses, the loan agent will be able to estimate of how much mortgage the borrowers qualify for without analyzing any actual documents or credit report.
At this stage, borrowers will also learn about available mortgage options that fit their financial situation. Since no documents have been verified, the quoted rates and terms are estimates only.
A pre-approval is issued after the mortgage consultant has reviewed all the required documents and analyzed borrowers' credit report. It should not be confused as a loan commitment, but rather a letter stating that the lender is willing to lend a certain loan amount to the borrowers, allowing them to determine the price range of the home they are going to purchase.
In this competitive market, a pre-approval is almost crucial for a buyer's offer. Not only does it increase the seller's confidence in buyer's buying power but it also speeds up the loan process later on after the offer has been accepted.
The application is considered complete once we receive the 6 following items (PENCIL)
- Property address
- Estimated home value
- Loan Amount
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Once we have received the borrower's complete application, we will analyze, re-package and submit to a lender that has the products and rates that best suit your financial needs.
Your loan officer will provide the borrower with a quote of the current rate, and borrower will have the option to lock or to float. Since rates change on a daily basis, please seek advice from your agent to better make your decision.
Within 3 days of receiving a complete application, the lender will issue a loan estimate, a three-page form that outlines your chosen rate, loan amount, monthly payment, closing costs, APR and other mortgage terms.
The loan estimate can be issued before or after rate has been locked. Borrower will have 10 business days review the terms and accept the estimate, which takes us to the next stage: Intent to Proceed.
After reviewing the Loan Estimate, borrowers have the option to move forward or withdraw. In order to move forward, we will need a written or verbal intent to proceed from the borrowers. The Intent to Proceed is usually required for the appraisal process to start.
In case the applicant does not want to proceed with the loan, there will be no further actions required.
A home appraisal is an educated estimate of how much your property is worth.
When an appraisal has been ordered, an appraiser will contact the homeowner (or their real estate agents in the event of a purchase) to schedule a date and time when the appraiser will come to inspect and valuate the subject property.
After the inspection, the appraiser will compile an appraisal report and submit to lender. If the appraised value is lower than the sale price, it is an indicator that the buyer may be offering more than what the property is actually worth. In this case, most lenders will require the buyer to come up with the difference between the sale price and the appraised value.
Once the lender received the initial submission package, they will start underwriting the file. If the file is eligible for the chosen loan, a conditional approval will be issued together with a list of conditions, called "Prior to Doc" conditions, calling for additional documents to verify all the information borrower has initially provided.
Once all conditions have been satisfied, the loan is now officially "Clear to Close."
The Closing Disclosure is a five-page form that provides final details about the mortgage loan the borrowers have selected. It includes the final loan terms, the projected monthly payments, and all other related fees and closing costs needed to obtain the mortgage.
It is important that the applicants acknowledge and sign the Closing Disclosure in a timely manner because after that, we need to wait for three days before closing can happen.
During signing, the final loan documents will presented to the borrowers by a public notary for review and signatures.The borrowers will either need to have wired all the required cash to close that includes down payment and all closing costs to escrow in advance, or bring a cashier check to closing.
After the documents are signed, the public notary will collect them and send back to the lender for a final review. There might be additional conditions,called "Prior to Fund" conditions, to be cleared at this stage.
After the lender reviewed the signed package and all the conditions have been satisfied, they will arrange for funding of the loan. Funding can happen as soon as on same day for a purchase, or on the 4th business day after signing for a refinance. That three day waiting period is called a rescission period, where borrowers have 3 days to change their mind and call for the cancellation of the refinance transaction prior to funding.
Once the loan has been funded by the lender, the escrow company will have the mortgage note and deed of trust recorded at the county recorders office, immediately after which the fund will be disbursed to the appropriate parties.
The loan is officially closed by this stage.