What Does the Mortgage Process Look Like?
In todays world, the mortgage process is often portrayed to consumers as "click a button & get your loan!". Upon realizing that type of process is a far cry from reality (for most consumers), people understandably become frustrated. Overpromising and underdelivering is the name of the game for companies advertising spaceship mortgages, mortgage shopping from your boxer shorts (ugh, I hate that little green guy), and other things that make the process as easy as 1, 2, and an unprofessional 3. While the mortgage process is never that simple, it also doesn't need to be that difficult.
To start, let me briefly explain why the process can be complicated - since TRID came to pass, lenders have a specific order in which they can send out documents and disclosures, and are prohibited from requiring certain items up front. So a lender is left with only the option to request what they think they may need up front, analyze what they receive, then ask for what they actually need. If those items come in and raise further questions, it can lead to yet another document request. And this is before a loan even gets in front of an underwriter. OUCH!
Every lender under the sun has their own process on how to get things done, and I've worked through many different workflows, but I believe we've found one that works best for my clients and my team. So while I can't explain what the process may look like at other lenders in the marketplace, I can outline my own personal mortgage process. This is what you could expect when applying for a loan with the JM Loans team at Mason McDuffie.
Step 1 - Needs list #1
After taking an application, I'll consider which options a client has available, present those options, and when a client decides which loan option works for them, I'll request a list of items I expect we'll need for underwriting. This is where the basics are obtained - paystubs, tax returns (for self-employed folks, or those working with large commissions, rental incomes, etc), asset statements, and other standard documents. At this time, clients are also emailed their disclosure package to be electronically signed (or mailed, if they prefer), and their "intent to proceed", a TRID requirement.
Step 2 - Needs list #2
After receiving the basics, I review all of the received documents with my processing team, and determine if we're OK to submit the file to underwriting. If received documentation has raised any questions that would require further documentation or explanation, we request that, and we also send out a couple disclosures that require actual pen signatures (most of our disclosures can be esigned) and those forms we're prohibited from sending out before a client completed their "intent to proceed". The file should now be as complete as we can possibly foresee, and is submitted to underwriting.
Step 3 - Needs list #3, or clear to close
In a perfect world, and on very straightforward loans, at this stage in the game the file is underwritten, approved, and given the OK to move to our closing/funding team. If the underwriter has any additional questions or feels they need further documentation, there may be a small needs list of items needed to get that clear to close. At this point, your loan is clear to close and 100% approved provided nothing has substantially changed with your debt load or employment during the process.
Step 4 - Closing prep
Most loan programs require a lender, once approval is issued, to do a pre-closing audit along with some pre-closing checklist items. This includes a final verification of employment to ensure employment terms did not change during the loan process, a soft credit inquiry to ensure no new credit accounts were opened along the way, and making sure proper insurance dates are set. This is where your closing documents are prepared and sent to your closing company whether it be a title company, escrow agent, or attorney, depending on your state customs. If you're in a transaction subject to TRID requirements, you'll have a 3 day wait from the time your closing disclosure is sent out and the day you can sign closing documents.
Step 5 - Funding
This step is your official finish line! Congratulations, the mortgage process is over, your money is wired, and either the house is yours (unless you're in a state with a close of escrow that happens a day or 2 after funding) or your refinance is completed and your previous lender is paid off. There may be a window called the "rescission period" for some loans that require a 3 day wait between the time closing documents are signed and money is sent, but either immediately, or after that 3 days, you're all set! Any cash back due to you will be either wired or a check sent via overnight mail, depending on the arrangements made with your closing agent.
That's all! Of course, while the above steps are being taken, we're doing plenty behind the scenes to ensure your loan goes through OK - appraisals are ordered, title reports are ordered and reviewed, insurances are put in place, HOA documents are reviewed, and we ensure everything is done within high compliance standards, but those are the things our clients don't really see along the way.
For a standard loan with a borrower returning the above listed 'needs list', the loan process can and should take less than 3 weeks, and can take as little as 2 weeks if we need only standard documentation and an appraisal & title work comes in quickly. For complicated transactions involving multiple properties, income streams, assets not yet available, or credit issues, the time frame can be a bit longer, but the process will largely be the same.
That's it - the big, bad, mortgage process broken down into a few steps that are easy to understand and easy to navigate. As a mortgage loan officer, my job entails not only helping you find the right mortgage product, but helping to ensure your experience from the time we take the application to the time your loan funds is a good one, and setting expectations up front plays a large role in that. Many people have heard nightmares about the loan process, but these are largely a result of either very complicated transaction, and incompetent loan officer, or (in most cases) improper expectations set before the process begins. In reality, the process really is as simple as the steps listed above.