How the Mortgage Loan Process Works
Once you've completed the loan application, you might wonder what the next steps in the mortgage loan process are and how the behind the scenes will work. There are several steps to take you from open to close and our goal is to get you there with as little stress as possible!
The first step is to move your loan into processing where all of the verifications will be done. We call this the "order out" process. During this period, the processor working on your file will order title work and title history, property tax records, condominium questionnaire if applicable, homeowner's insurance policy, verification of assets and employment plus any other documents essential to your loan approval.
In order to verify this information the lender will need copies of your last 2 years tax returns, pay stubs from the last 30 days and bank statements from the last 2 months. All told, the process can take 2-3 days or more depending on the response time to our requests. Unfortunately for everyone involved, second requests are more normal than not.
We will also order the appraisal during this period as long as the home inspection has been completed so it's important to schedule this as soon as your offer is accepted.
Once that information is received, we will submit the loan to underwriting. Keep in mind - the appraisal can take upwards of two weeks to return and we attempt to submit once that has been received. Underwriters prefer that we submit a complete loan package rather than turning in a few pieces at a time. However, in today's market this may not be possible so discuss your dates and deadlines with your lender to ensure everything moves according to plan.
Once your file is in underwriting, the underwriter reviews the file and makes sure that all of the documents provided support the information given to the Loan Officer at the loan application. They will also verify that the appraisal supports the value of the property.
When your loan is approved you will typically receive a "conditional approval."
This means the underwriter is requesting additional information before we're able to close. The time from underwriting to a "conditional approval" is anywhere from 24-72 hours.
Once we receive the conditional approval, we gather the necessary documents and then re-submit all of the paperwork at one time. The underwriter should then review and sign off on that information. However, there are circumstances where they will request further info. As you can imagine, we are somewhat at the mercy of our underwriter and like all people, underwriters are subject to their own interpretation of mortgage loan guidelines and requirements.
At this point, we should receive our "clear to close." We now work with the title company to make certain that the loan documents are prepared correctly and the settlement statement reflects the costs projected on the Good Faith Estimate, provided to you at loan application. We will send the wire so the funds are at the title company on your day of closing. Your Loan Officer will then go through your final numbers with you so you're aware of the amount of money you will be required to bring to closing.
Once your loan is closed our job is not done. We will continue to monitor the market and notify you immediately of any refinance opportunity. We also want to make sure there aren't any unanswered questions that come up once you're in the home.
Just remember that the money you borrow comes from Wall Street investors and they are very picky when it comes to protecting their investment. The federal government also oversees every step of the process and as you can imagine penalties for non-compliance are steep. The result: lots of paperwork!
How the Mortgage Loan Process Works was written by Rebekah Radice