Loan Process

The Loan Process From Application To Closing:

Organize Your Documents

Whether you are purchasing or refinancing a home your "To Do List" is going to look about the same:

Salaried or hourly employees: Provide your past two years W-2 statements and most recent full month of pay-stubs. Self-employed: Provide your past two years personal and business tax returns, with all schedules. A year-to-date P&L statement is occasionally required. Commissioned sales people: Provide your past two years W-2 statements, most recent full month of pay-stubs and past two years tax returns, with all schedules.
If you own rental property, provide rental agreements and/or schedule "E" from your past 2 years of tax returns.
Provide two recent months of bank statements (all pages) for each checking, savings or other bank account.
Provide recent copies (all pages) of any stock brokerage or IRA/401-K or other investment accounts you may have.
Name and phone number of your home insurance agent.
For purchases: Copy of signed purchase agreement.
Appraisal fee to be paid directly to the appraiser.
Non-USA citizen: Provide a copy of your resident card. If you are not a permanent resident provide your legal Visa.

Special Note:

The lender's automated underwriting system will in many cases require much less documentation than what is listed above. Your loan application will be submitted into the system to determine what documentation is necessary. However, if you have all these items available and organized you can easily avoid any delay.

Consider Your Loan Options

To choose a loan you will need to:

Think about how long you plan to keep the loan. If you plan to sell the house in a few years you may save money with an adjustable rate loan. If you plan to keep the house for a longer time compare the fixed rate loans.
Understand the relationship between rates and points. Points are paid to buy down the interest rate and visa versa. Although points are considered to be prepaid interest and are tax deductible one should determine the time it will take to earn back the cost of any points paid through new monthly payment savings.
Your mortgage broker should be your champion and adviser searching for the best possible financing to assist you with your important real estate transaction. Ultimately the decision is yours so knowing what the options are will give you the information you need to compare the options and make your choice.

Obtain Loan Approval

The lender's underwriter will review your loan application and verify your:

Credit history
Employment history
Assets including bank accounts, stocks, retirement, etc.
Property appraisal and title report

Additional documents or verifications may be required:

Once your loan application has been reviewed by an underwriter, it is not unusual that additional information may be required. Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
It is advisable to not make any other major purchases. For example: Put off buying a car, furniture or anything that will cause your debts to increase or have an adverse affect on your current mortgage application.
It is best not to move money into your bank accounts unless it can be traced. If you are receiving money from family, relatives, or other sources, please contact me.

Closing the Loan

After your loan is fully approved your loan documents will be sent to your escrow company. The escrow officer will prepare a closing statement carefully prorating all costs. The escrow officer will call you to setup an appointment for you to sign your loan papers and will tell you the exact dollar amount you will need to bring to the signing.

Be prepared to:

Bring a cashiers check for your down payment and closing costs, if required. Personal checks are not accepted. You may have funds wired to escrow. It is best to make wiring arrangements with escrow ahead of time.
Review the final loan documents. Make sure the interest rate and loan terms are correct. Verify your name and property address are correct on the loan documents.

Your loan will normally close shortly after you have signed the loan documents. On refinance and home equity loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can close. The lender will review the signed documents and upon approval will wire funds into the escrow company's account. As a final step, the escrow company will have the note and deed recorded.

LOAN APPLICATION

Stated Income, No Ratio and No Doc Loans: These loans are no longer available. The federal government has determined that borrowers must show proof they have the ability to repay the loan.

If you take the time to get a loan pre-approval certificate from a lender it will show the seller that you have mortgage loan approval to purchase the house. In a multiple offer situation with all else being equal the seller may accept your offer over others if you are already approved for a loan and qualified to buy the home.