The Mortgage Process: From Application to Ownership!
Mortgage Application
The application process begins with you filling out the application, signing various forms that authorize the lender to process your loan, and you deliver to me your documentation requirements (bank statements; pay stubs, W2s, etc.). The most time-efficient way of delivering your supporting documentation, is emailing PDF attachments, or delivering everything in person. Faxing documentation is also an efficient way of providing documentation. You should understand that the next process cannot begin until these documents are completed and or received, and depending on your individual loan structure, additional financials or documentation may be required.
Mortgage Processing
When all of your documentation is received, and your signatures have been obtained on all the required loan paperwork, your file then goes to a processor who verifies and validates all of the information to be true and correct. Verification requests may be sent to your employers, mortgage holder/landlord, bank, and lending institutions. This is done by email or fax when possible. It is usually during this time frame that the inspections you or the lender requires are completed and the appraisal, title commitment, and homeowners insurance are ordered.
When all the information is collected, the processor then verifies that basic lender loan requirements have been met. The file is then organized in a manner the lender specifies. The completed loan package (including the appraisal and title report) is then sent to the underwriter.
The processing of your loan usually takes about one to two weeks but it can often be delayed when third parties (employers, landlords, etc.) do not respond to the verification requests or appraisals are delayed. If your loan qualifies for one of the automated underwriting systems, DU-Desktop Underwriting, or LPA-Loan Product Advisor, the documentation requirements are often cut in half. The process can be completed in three to five days depending on the volume of loans the processor has if your loan application has been deemed “Approve/Eligible” or “Accept/Eligible” by an automated underwriting system.
Automated Mortgage Underwriting
Most lenders today use Automated Underwriting (DU or LPA via computer). The advantage is less documentation and it speeds up the process. The computer program actually makes the approval decision and the actual underwriter only reviews the supporting documentation, the appraisal, and the title. The computer program generates an outline, or a road map for the actual underwriter to follow. This speeds up the process, and typically allows for less documentation needed from the borrower. However, if any documentation is missing, inaccurate, or does not agree with the original application or automated decision, the actual underwriter has the authority to request any documents necessary to support the application and make an educated decision. This request comes back to the processor in the form of a condition, as covered in the sections to follow.
Mortgage Underwriting
The underwriter reviews your loan package to make sure it conforms to all the guidelines required for your loan product. They also review the appraisal and title report and may require additional verification of employment, mortgage payments, credit, and anything else they decide is necessary to document your loan. These additions are called “Approval Conditions”. When an underwriter adds approval conditions, your processor or loan originator will ask you for additional documentation. This is a normal process and essential for a clear underwriting approval. Underwriters have ultimate power and decision authority over the approval of your loan, despite the decision made by an automated underwriting system. The time required to do this is driven by the volume in the market. Once with the underwriter, we typically get a response within 1-3 days.
Conditions To Close
When the underwriter is done reviewing your loan, she/he will send "conditions to close" to your loan originator or your processor. These are normally just requirements for further documentation to support your file. When these needs have been satisfied, the underwriter will give a final approval and "clear to close".
Clear To Close
When I receive word that I have been cleared to close the loan, I coordinate with all parties and decide on the time and location to sign the final documents necessary to close the loan. This normally takes less than an hour to schedule if it has not already been done by you and your agent. Our closer will then contact you with the amount to bring to closing, verify your loan amount, your interest rate, your payment amount and the place and time of your closing. This is normally done within 2-3 days of your closing date.
Draw Documents And Close
When everything is scheduled and the time and location are verified our closing department then prints the closing package and sends it to the closing company. This is normally done electronically. You then meet, sign the papers, deliver your certified funds if needed, and pick up the keys per your contract specifications. Congratulations! You are now a homeowner!
