In the first Post of this series “First Time Homebuyers Seminars…..Part #1.” I gave an introduction into the “First Time Homebuyer Seminars” that we at McCue Mortgage, started to promote in September of 2006. This is a different concept in how these Seminars have been done in the past, and so far they have been well received. The second Post of this series “First Time Homebuyers Seminars…..Part #2.” I covered the costs involved in purchasing a home, and presented questions for home buyers to consider as to how expensive a home they can afford to purchase. In this Post I will cover the process that a Buyer will have to take in order to “Obtain A Loan” with us.
Once I have gone over the costs in purchasing a house, and presented the questions for those in attendance to consider as to how expensive a home they feel they can afford to purchase, that I covered with them in Part #2. They will then need to get Pre-Approved from a loan by a Professional Loan Officer that will take the time to take a full loan application, this means not only looking at their credit, but also complete financial situation. I will not go into detail about this process here, but for those who are interested in seeing in detail what that process is, you can read my Post “1st. Time Homebuyers…..What You Need To Do First.” Once they have been Pre-Approved they can begin to look for a home in the price range that they can afford and qualify for.
Finding A House - The next step is to find a house and have their offer accepted by the Sellers, this means getting a fully executed Sales Contract. Once they have a Sales Contract they need to contact the Loan Officer that Pre-Approved them and apply for a Loan. At this point I describe to them what the steps are that I take once a Buyer comes to me to apply for the loan.
Application - If they were Pre-Approved by me prior to being under contract for a house, them I pull up the Application I took when I Pre-Approved them, and I verify that everything is still correct. If I have not Pre-Approved them before this, then I take a full application at this time. At this time I also collect all of their updated Documents the verify their income and assets. Depending on the type of loan, Income Tax Returns, and W2’s may also have to be collected.
Loan Programs & Terms - I go over with them the Loan Programs that they qualify for, the interest rate for each one, monthly payment with taxes, insurance, and PMI if the downpayment is less than 20%. I also go over the terms of each loan program. I answer any question that they might have about each program until they have selected the one that they are most comfortable with.
Credit Report - The next thing I do is look at their credit to make sure that there have not been any changes to it from when I Pre-Approved them. If I did not Pre-Approved them before, I do this before I take the full application.
Automated Underwriting - The Application along with the Credit Report is run through Automated Underwriting to make sure that we have an Approved/Eligible. If we do I continue with the process, if I don’t I read the findings to see why it is not an Approved/Eligible. Most of the time at this point, especially if I Pre-Qualified them before, the reason why I am not getting an Approved/Eligible is because I put something in incorrectly. So I make the corrections and print out the Application and all of the disclosures.
Signing Loan Application - Once I have done all of the above and have gotten an Approved/Eligible, I printout the Loan Application and all the disclosures for the Buyers to sign. I then explain every page of the Loan Applications as the Buyers sign it, as well as the disclosure that I will talk about next.
Good Faith Estimate (GFE) - Now that we have a property I do a GFE and go over all the Closing Costs with the Buyers line by line. Any figures that I have to estimate, I estimate high because I do not want them to have any negative cost surprises as we proceed. I also tell them what the full estimated amount is that they will have to bring to the Closing, including downpayment. The only surprise I want them to have is that the Closing Costs will be less then what I told them.
Truth In Lending (TIL) - I go over the TIL with them, and point out the Annual Percentage Rate (APR), Finance Charges, Amount Finance, and the Total Amount of their Payments.
Disclosures - There are several other disclosures besides the GFE & TIL that they will have to sign along with the Buyers Certificate, which gives us the right to check out the information that they have given me, Rate Lock & Point Letter locking the rate and points for a specific period, and a 4506 giving us permission to ask the IRS for Tax Returns if we need to.
Appraisal - Once the Loan Application is signed I order an appraisal, which the Buyer can receive a copy of if they want.
Underwriting - Next the Loan Application along with all the disclosures, income and asset documents as well as Tax Returns and W2s (if needed), Sales Contract, Copy of the Credit Report, and the Automated Underwriting Findings are all turned in with the Loan to be Underwritten. The Underwriter usually has the Loan Underwritten by the time the Appraisal comes in. If the property appraises for the full selling price the Underwriter approves the Loan, and sends it to the Closing Department.
Closing Department - Once the approved Loan is received by the Closing Department, a Commitment Letter is sent to the Buyer and their Attorney with all the conditions that might still have to be met before the Attorney receives a Clear To Close.
This completes the steps that a Buyer takes with me in order to obtain a Loan. From here all of the Documents that the Attorney will need to start what he needs to do before the Loan can Close is forwarded to the Attorney. I will cover those steps in the forth and final Post in this series.
Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or firstname.lastname@example.org