The loan process has become more involved in the last few years and tightened lending practices pose new hurdles for buyers. Being informed is the best way to keep abreast of changes in the lending process. Having a great loan officer as part of your team during your purchase is essential. Larger banks and institutions are taking longer to close a loan so make sure you get information on their average closing times. We’re seeing 35 days on lenders who are their own underwriters and perhaps up to 45 days for the “BIG” banks. Here’s a good idea of the lending process lately. Feel free to email with questions if you have any during your buying process.
a. Information from borrower
1. Personal information
2. Supporting documentation
3. Automated Underwriting
4. Initial fees worksheet
II. House Under Contract
A. Update all information from borrower
2. Agreement of loan terms
3. Initial Disclosures and Form Loan Application
4. Execute Floatdown Agreement (if rates are down, lock it once up to .375% less)
III. Option Period Ends
A. Order appraisal
B. Order title
C. Order survey if applicable
D. Submit to processing
1. Sometimes the file is submitted to processing prior to option period ending.
A. Fraud guard (basically a background check)
1. Make sure DOB, Name, Addresses, Employment, SSN & other facts match.
a. This sometimes requires further explanation from borrower.
b. Will show if borrower owns other properties
1. Employment and/or income
2. Verification of Rent (if applicable)
3. Tax returns (4506)--all loans
4. Social Security Number validation
C. Review Credit, Income, and Assets
1. Must make sure that the documentation we have meets underwriting requirements
2. Update documents that have expired
3. Request additional documentation not requested by Loan Officer
4. Ensure that appraisal is received
A. Did it make value?
B. Is it “as is” or “subject to”
D. Re-run Through Automated Underwriting
A. Reviews all documents submitted by processor
B. Validates automated underwriting findings
C. Determines approval ability based on underwriting guidelines set by Fannie Mae, Freddie Mac, FHA, & VA.
D. Creates “prior to document” conditions based upon review of findings.
1) Example—Bank Statement w/ large deposit (not employment) & to provide documentation and explanation.
E. Creates “funding conditions” based upon review of file
1) Example—Final Inspection of property or cash to close cannot be higher than a certain amount of money
A. Reviews Legal Aspects of File
1) They work for a law firm employed by lender
4) Insurance—sufficient coverage
B. Give Instructions to Title on Creating HUD1 and provides loan legal documents to sign at closing
C. Approve HUD1
D. Order Funding (wire)
A. Reviews Funding Conditions
B. Verifies all documents have been signed properly by all parties
C. Release Funds for Closing
This of course means....LOAN IS OFFICIALY CLOSED AND PROPERTY SOLD!!!! :)
Special Thanks to Prime Lending:
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Diego E. Jaramillo
Realtor, ABR, e-Pro
Keller Williams Houston Metropolitan
Online at www.HoustonHeritage.com
Facebook Fanpage: www.DiegoJaramillo.com
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Original posting at: http://www.houstonheritage.com/blogs/