THE LOAN PROCESS WHEN PURCHASING A HOME
The loan process can be confusing to new and even seasoned homebuyers. Much of what people have experienced in the past influences how they think the loan process works. Depending on who you used for your last home loan, your experience may have been good or bad. At Uptown Mortgage we believe that the loan process should be predictable and painless. The only way for any mortgage company to achieve this is to have a thorough understanding of how the loan process works and to have the right people in the key roles that interact with your loan at various stages of the process.
Prior to the beginning of the loan process, you are going to talk to one of our loan officers and get prequalified. This is where the majority of potential loan issues will be identified. After getting prequalified, you will get some generic estimates based on a fictitious property, sales price, down payment, etc. The loan officer will give you a lender letter and you will go out with your real estate agent to find a home.
As you are searching for your new home, you should keep your loan officer in the loop. When you find potential candidates for your new home, you loan officer can provide revised estimates that are specific to the property you are looking at. They will also be able to advise you and your real estate agent how much you may need to request from the seller in closing cost incentive so that your out-of-pocket cost stays as low as possible.
Once you’ve found a home and you and the seller have agreed on a purchase price, the loan process begins.
LOAN APPLICATION / LOCK YOUR INTEREST RATE
As soon as you have a property address you can get your interest rate locked. You should contact your loan officer as soon as you are officially under contract so that you can get this done. From there you will need to either meet with your loan officer to sign the loan application package or you can have your loan officer deliver your loan package to you electronically. There are supporting documents that you will need to provide if you haven’t already. Below is a generic list, but contact your loan officer to get a list specific to your particular situation.
- Most recent 2 years W2/1099 forms
- Most recent 2 years Federal Tax Returns (All Pages)
- Most recent month’s paystub(s)
- Most recent 2 month’s statements for Checking, Savings, and Retirement accounts (All Pages)
- Copy of your driver’s license
- Homeowner’s Insurance Agent’s name/number
Following the receipt of all this supporting documentation and the signed loan package, you loan officer will submit your loan to the underwriting process.
LOAN FILE SETUP / INITIAL UNDERWRITING APPROVAL
Prior to your file being reviewed by an underwriter there are a series of checks and verifications that are ordered in loan setup. Your SSN will be verified with the Social Security Administration, your tax returns will be compared to what the IRS has on file, and we will verify your employment directly through your employer. With certain types of loans other verifications will be ordered depending on the program guidelines. We also do a second review of all the documentation provided and see if anything else is needed from you prior to submitting the loan to the underwriter. After all of this has been completed the loan is submitted to the underwriter for review.
The underwriter’s job is to review what has been submitted and ensure that it meets the agency or investor’s loan guidelines. Assuming that your loan does, the underwriter will issue an initial credit approval. This initial credit approval will contain a list of conditions that have to be met in order for the loan to be final approved.
GATHERING CONDITIONS / RESUBMITTING FOR FINAL UNDERWRITING APPROVAL
You will be contacted by your loan officer or your loan specialist after the initial approval is in. At that point they will have a list of just about everything needed to final approve the loan. They will ask you for these items, and the sooner you return them the sooner the file can be submitted for final approval. Keep in mind that often you will provide documentation (typically asset documentation) that can bring up additional questions and require further documentation.
Once all the documentation has been gathered, the file will be resubmitted to underwriting for final approval. Our goal at Uptown Mortgage is to only have two iterations (submissions) to underwriting to get your file final approved.
LOAN FIGURES / LOAN DOCUMENTS / FINAL VERIFICATIONS
Once your file is final approved by the underwriter, the first thing that we do is send loan figures to the title company. This enables the title company to draft a final HUD Settlement Statement so that all parties (buyer, seller, and real estate agents) know what the final figures are. At Uptown Mortgage we guarantee that we will get your figures to the title company at least 3 days before your closing.
Before our company is able to release loan documents to the title company, we have to re-verify that you are employed and also that you have not opened any new loans, credit cards, or other debts. We will verify this again, often as soon as 1 day prior to the closing. Once this has been re-verified we will release the loan documents to the title company.
This is the exciting part – getting your home! There is not terribly much required from you as a buyer aside from showing up and signing everything. All of the hard work has been done at this point. You will need to bring your down payment to closing and it will need to be in the form of a cashier’s check or a wire transfer.