Ten Steps to Homeownership

Step 1. The Application 

The key to the loan process going smoothly is the initial application interview, after receipt of the application by the loan consultant. It is at this time that all pertinent information is obtained and necessary documentation is reviewed so unnecessary problems and delays may be avoided. This is when loan programs best suited to meet the homebuyer's needs are reviewed and discussed.

Step 2. Automated Underwriting

Credit is pulled and reviewed with the homebuyer for accuracy. The application is then "uploaded" to an Automated Underwriting engine. The Artificial intelligence then reviews and analyses details such as income, credit history, debts, property details, debt-to-income rations, etc. This process evaluates the borrower's financial picture and makes a credit decision.

Step 3. Requesting Documentation 

The next step after receiving the initial lending decision is that the loan consultant requests certain documents such as bank statements, W2's (2 years), verification of funds, landlord details, previously discussed and based on the "findings" or requirements of the Automated System.

Step 4. The Homebuyer Goes into Contract on a Property 

Step 5. Loan Submission  

After the contract is accepted, and once all of the necessary documentation has been acquired, including the property appraisal and any required inspection reports the loan consultant completes the loan package together and submits it to the underwriter for final approval with a detailed cover letter. The final loan package includes the contract on the property, the property appraisal, preliminary title reports and any conditions that were identified in the automated underwriting process. This submission is for formal loan approval. 

Step 6. Loan Approval 

After reviewing the contract, property appraisal and preliminary title reports the underwriter validates the conditions from the automated underwriting process. Assuming all criteria are met, the loan is approved and/or other conditions may be requested as terms of docs or funding. If the criteria is not met, or there are ambiguities the loan may be "suspended" and further information is requested. 

Step 7. Rate Lock 

The loan consultant should have discussed rate lock options with the homebuyer during the initial interview and during follow up calls during the process. If the rate wasn't locked after application, it needs to be locked prior to the drawing of the loan documents. The hazard in waiting this long is that with the recent changes in required disclosure, if the interest rate market has moved... from the original GFE quote and there is over .125 change higher or .25 lower Annual Percentage Rate a full redisclosure is required and loan documents may not be signed for 7 days. This could cause a 10-14 calendar day delay in closing. 

Step 8. Documents Are Drawn 

It's all about communication. Once there is final approval and the rate has been locked loan documents are requested. It can take several days from the drawing request to actual receipt of the emailed documents to reach escrow. It is important that all details are final and communicated to the loan consultant. The Homeowners Insurance premium quote needs to be available not just to escrow but to the lender for an accurate monthly payment. Some loan consultants like to coordinate the date and time of the closing appointment between buyer and escrow so they can be present at the signing. Others, prefer to let escrow schedule the details and are available for questions via phone. 

Step 9. Funding 

Once everyone, including the Sellers have signed all the necessary documents, they are returned to the lender, who reviews the package. If all of the forms have been properly executed, the funds are set to wire to escrow. It is at this time that lenders review any pre funding conditions do a final "verbal" verification of employment. This is to guarantee that the buyers are still employed. (Don't surprise your loan consultant with a mid application job change. This will stop funding.) Additionally before the lender's funding the borrower must present a cashier's check or arrange for a wire transfer of funds directly to the escrow/title company for the required closing costs and down payment. No personal checks are accepted. 

Step 10. Recordation 

Upon receipt of the wired funds from the lender, the escrow/title company makes the lender's security for the loan a matter of public record by recording both the note and deed of trust at the County Recorder's office. Typically keys do not change hands until a confirmation of the recordation numbers has been received by escrow from the recorder's office. Escrow is now officially closed. Congratulations, the house is now yours.