Now I have a contract...What happens now?....A loan officer's view.

By
Mortgage and Lending with SWBC Mortgage 410-960-2061 NMLS 196068

Inspired by a post by Martha Brown, a wonderful Maryland Realtor on what happens on the Realtor side once a client wins a contract. I bring you....

Now I have a contract...What happens now?....A loan officer's view.

CREDIT:    Your credit report will have already been reviewed before the pre-qualification letter is written.  Now is the time to make sure that there are NO material changes to your score.  This means:

•1.       Continue to make all payments on time

•2.       Do not apply for or open ANY new credit

•3.       Do not buy any big ticket items using available credit, if you are not sure if a purchase will affect your score, ask your lender PRIOR to making the purchase

•4.       Do not pay off anything that your lender doesn't tell you to pay off

•5.       Do not DISPUTE any items on your report, this can delay settlement

APPLICATION:  This is the beginning of the contract between you and your lender.  You will sit down* with your lender to sign the completed loan application and all required disclosures. Your lender will explain all documents so that you can understand exactly what you are signing.  This is the time to ask for clarification on anything that is not clear or that you don't understand.  It is important that all information is complete and truthful.   Be ready, the loan package is extensive, in a typical loan package there are at least 100 pages.   

*Please note, if you are not dealing with a local lender, you will probably be sent the loan package in an overnight package or by email.  In this case, it will be extremely important to read each page very carefully to ensure that you fully understand each document.

PRELIMINARY VERIFICATION:  The lender will ask you for documentation to support items presented in the application. Many of these documents may be updates from the pre-qualification

•1.        Income

•a.       At least 2 consecutive pay stubs covering 30 days of income for all parties to the loan

•b.      Social security/Disability Award Letter -most recent

•c.       W-2's for the previous 2 years

•d.      Tax returns if you are self-employed, or there are any non-reimbursed business expenses or Schedule C income/loss

•e.      Documentation of receipt of child support/alimony payments

•2.         Assets

•a.       Bank Statements - 2 months (all pages)

•b.      401K (Most recent 2 months, or quarterly statement-all pages)

•c.       Gift  Funds for the down payment or closing cost-Gift Fund Affidavit  (lender will provide form) and documentation the donor's ability to gift as well as a "Trail of Funds".  The trail of funds is proof of the funds coming from the donor's account into your account.

•3.       Identity

•a.       Driver's License

•b.      Social security card

Appraisal Ordered-The appraisal is done to determine the value of the home by comparing recent sales and listing of homes within close proximity and most like the subject property (the home you are buying).  Depending on the type of appraisal, the appraiser may require repairs to meet certain loan guidelines.  If repairs are required, the repairs will need to be completed (by the seller).  The appraiser will complete a final inspection (at the buyer's cost, usually $100) to verify the completion of the work.

Title Work Ordered -The title company will send an abstractor to the court house to determine:

•1.       if the seller has a saleable interest in the property (the right to sell)

•2.       if there are any use restrictions on the property

•3.       if there are any liens (mortgages, unpaid taxes, mechanic's liens, etc.) on the property that will need to be paid off at closing.

2nd Level Verification-   The lender will verify submitted documentation through:

•1.        Verification of employment -

•a.       Telephone-calling your employer to verify that:

•1.        you are employed,

•2.       your length  of employment

•3.       probability of continued employment

•b.       Written-fax or email lender form to employer to verify above information as well as:

•1.       Current and previous income for previous 2 years breaking down by base, overtime, bonus, etc.

•2.       Most recent raise and amount

•3.        Projected raise and amount

•2.       Verification of Deposit -verifying asset accounts, may be used instead of bank statements

•3.       Credit-

•a.       An explanation of inquiries into your credit and any derogatory credit may be required.  The lender wants to know if any new credit has been opened as a result of an inquiry that may not be showing up on your credit report. They also want a good explanation for late or missed payments, collections, judgments, bankruptcy, etc. to determine if you are a good credit risk.  With a good explanation (medical event, unemployment, death of a loved one, divorce) many lenders will be able to see that the negative credit was a result of a one-time event or mistake and not a prediction of future credit handling.

 

Loan officer will work with you to clear up any discrepancies in the information provided.

SEMI-FINAL VERIFICATION:  All paperwork will be gathered and placed in an order that will allow the underwriter to easily review and confirm.

The bank will review the documentation provided and mail out investor/legally required disclosures to the borrower outlining the terms of the loan.   These will probably not be the final disclosures.

REVIEW TITLE AND APPRAISAL:   Upon receipt of the title and appraisal, the loan officer/processor will review and determine if additional items or repairs are required.   If so, this is communicated to the borrower and/or realtor.

HOME OWNER'S INSURANCE:   The loan officer/processor will call the homeowner's insurance agent of your choosing to ask them to add the lender's mortgagee clause to your policy and ask for a paid receipt or invoice.

CONDITIONAL APPROVAL:   As long as everything in the loan package meets the guidelines for the bank's investors, the underwriter will provide a conditional approval to the lender.  

The loan officer/loan processor will work with the client (borrower), appraiser, title company, realtors, homeowner's insurance agent to provide the information to allow the underwriter to clear any final conditions.

The loan officer will provide any final required disclosures to the borrower for signature finalizing the loan amount, rate, fees.

FINAL VERIFICATION:   All final underwriting conditions are sent to the underwriter for review.

Final approval is given by the underwriter, file sent to the closing department.

CLOSING:  Closing department reviews the loan package to ensure they have everything they require prior to closing.  All closing conditions are sent to the closing department for review, updates if any are completed and your closing is scheduled.

Closing is coordinated between the borrower, closing agent, lender, as well as realtors and sellers if a purchase. 

You meet with the closing agent to sign the lending bank's packet that will look very similar to the original application package with additional lender specific forms.  The title agent will review the entire loan package to confirm that you understand everything you are signing.  At this point, this should go fairly quickly as most of the documentation will be duplicates of the original package you went over with your lender.   If you don't understand something or it is different than presented by your loan officer, ask questions.

Hopefully now that you have reviewed the process of getting your mortgage loan to the closing table, you have a better understanding of "What happens now?"

Posted by

Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  SWBC Mortgage.   410-960-2061 EHO   bridget.mcgee@swbc.com or www.marylandmortgagemama.com

 

If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

close

Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Martha Brown 02/02/2011 12:22 PM
  2. Ellie McIntire 02/27/2012 01:51 AM
  3. Fernando Herboso - Broker for Maxus Realty Group 02/27/2012 06:23 PM
  4. Ed Silva 02/27/2012 10:03 PM
  5. Ron Cooks 02/27/2012 11:21 PM
  6. Bob Caldwell 02/28/2012 04:14 AM
  7. Gabe Sanders 03/04/2012 07:47 PM
  8. Joy Daniels 10/27/2012 07:43 AM
Topic:
Mortgage / Finance
Groups:
Active Rain Newbies
Mortgages
PG County Real Estate Pros
Maryland Real Estate and Mortgage Group
Tags:
loan process
mortgage advice
maryland mortgage
md homes for sale
md mortgage
maryland mortgage mama

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Rainmaker
669,781
Martha Brown
Long & Foster Real Estate, Inc., Annapolis MD 21403 - Annapolis, MD
Your Homes Around Annapolis Agent

Wow Bridget this is great. It answers so much about the behind the scenes goings on for a Buyers loan approval. Great job! I am glad I inspired you! :0)

Feb 02, 2011 12:17 PM #1
Ambassador
1,024,305
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

I'm glad Martha inspired you, too!  I feel a re-blog coming on... probably over the weekend.

Feb 03, 2011 12:21 AM #2
Rainmaker
365,847
Bridget "Mortgage Mama" McGee
SWBC Mortgage 410-960-2061 - Baltimore, MD
Maryland Mortgage Mama NMLS#196068

Martha,  Thanks so much, your compliment means a lot!  Working together to educate buyer's one blog at a time!!

Margaret, thanks so much for the re-blog, hope it helps to get a "glimpse behind the curtain!"

I am so looking forward to seeing you both this weekend!

Feb 04, 2011 01:39 AM #3
Rainer
8,858
Scot Rife
Centerville, OH

I had a borrower last month that was buying a primary residence take a job in another state while his loan was in process and then he was surprised when he wasn't approved. The disputes are a big deal too. Good advice!

Feb 27, 2012 09:37 AM #4
Rainmaker
925,111
Joy Daniels
Joy Daniels Real Estate Group, Ltd. - Harrisburg, PA
Bookmarked!! What a full of information post. Thank you
Feb 27, 2012 10:11 AM #5
Rainmaker
589,983
Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

But what about new furniture for the new place (on credit)

And a new washer and dryer (on credit)

And a new car for that second car garage...

Phil

Feb 27, 2012 06:32 PM #6
Rainmaker
4,798,519
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good information for those unfamiliar with the loan process Bridget, thanks.

Feb 27, 2012 07:28 PM #7
Rainmaker
1,560,275
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Great overview of the process for successfully getting a mortgage - the urge to purchase something major before a client gets the mortgage seems to be huge, but it can really impede their success!

Feb 27, 2012 07:29 PM #8
Rainmaker
1,402,727
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Bridget, an excellent walk through the loan process and a good check list of what a buyer can expect. Bookmarked for reference!!

Feb 27, 2012 09:30 PM #9
Ambassador
2,589,019
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

This is an ideal post to show prospective buyers what goes on once they find their home and start the process. They get worried about the gap in communications and have little knowledge of what is taking place.

Feb 27, 2012 09:58 PM #10
Rainer
59,906
Stephanie L. Solano
J. Philip Real Estate LLC Westchester County NY - Pleasantville, NY
Licensed Real Estate Agent

Great list for consumers to know. There are a lot of things working in the background.

Feb 27, 2012 10:09 PM #11
Rainer
61,616
Ron Cooks
The Real Estate Marketplace - Killeen, TX
Texas Real Estate, Ft Hood/Killeen Homes for Sale

Bridget, very thorough, great job! thanks for allowing us a peak behind the curtain. 

Feb 27, 2012 11:12 PM #12
Rainmaker
1,268,318
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Now keep in mind, I'm just joshing you (as another lender) ... but is that ALL you do???  Pretty easy job you have there, Bridget!!

Now that I've actually seen the process in print (nevermind all the little extras that can occur) ... I hope others reading it realize that there is so much to our jobs and what we do.  Lots of work going on behind the scenes ...

Great post, once again ...

Gene

Feb 27, 2012 11:32 PM #13
Rainer
255,563
Shay Campbell
Universal American Mortgage Company - Raleigh, NC
Raleigh, NC

Bridget, your post would be a great handout for any homebuyer.  Thanks

Feb 28, 2012 12:25 AM #14
Rainer
10,714
Rebecca Madej
Cunningham & Company Mortgage Bankers - Charlotte, NC
Lender in NC, SC, VA & TN

Excellent summary of the steps! 

Feb 28, 2012 03:44 AM #15
Rainmaker
571,868
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Bridget,  Yikes  !!!  That's a pretty impressive list of " To Do's " .  Nothing like a great loan rep to get to a closing table.

Feb 28, 2012 03:57 AM #16
Rainmaker
1,339,377
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Bridget, I'm here via Ed Silva's re-blog of this post...great info and I just wanted to say I have a client that I told not to buy anything (several times) before closing, also told them that changing jobs wold make everything go up side down.......SO.....what do you think this couple did...I'm sure you know...DOUBLE WHAMMY...and now they're wondering why we can't close on their new home as scheduled.

Feb 29, 2012 08:10 AM #17
Rainmaker
727,376
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Bridget-You wrote this almost two years ago, and it's still timely. I guess there have been a few changes, but for the most, it's what I've seen in Texas too.

Oct 27, 2012 07:50 AM #18
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Rainmaker
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Bridget "Mortgage Mama" McGee

Maryland Mortgage Mama NMLS#196068
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