Loan Approval is a Step-by-Step Process
For most buyers they might think finding a home is the first step.Well, the first step is getting financing to purchase the home if your not buying it cash This is a very good explanation from Rosie Moore to what is needed when your trying to get an approval. It give you all the players in loan process.
Now that you've executed a sales contract with the sellers, it's time to get approved for a mortgage loan.
This is the most time consuming part of the transaction process. But, if you have all the paperwork together, the process should go smoothly.
As a rule of thumb, it usually takes an average of 45 days (or longer) to close a real estate sales transaction when financing is involved. There's a lot of back and forth communication between the underwriter and the borrower during this entire process.
Three Players in the Loan Approval ProcessLoan originator (or representative): This person collects the borrower’s loan application and other supporting documents to send to the loan processor. The loan originator is your “go to” person during the mortgage approval process. The loan originator needs to keep you abreast of all conditions and underwriting guidelines that must be met to close your loan.
Loan processor: The loan processor prepares the loan file and verifies all documents before submitting it to the underwriter for review.
Underwriter: The underwriter either approves or rejects the loan. It is important to follow all underwriting instructions and meet all conditions to prevent any delays in getting your loan approved and closed.
The borrower’s finances are under a microscope during the entire process, even a day or two before closing.It is important not to engage in any activities that could affect your debt to income ratio and jeopardize your ability to get a loan. This includes applying for additional credit cards, financing a car, quitting a job, or not paying your bills on time.
Closing a Mortgage Loan is a Step-by-Step ProcessFirst, the lender and title company will receive copies of the executed sales contract.
IMPORTANT: Once the sales contract has been signed by both parties, a buyer should lock-in the interest rate and terms of the loan. A locked-in interest rate commits your lender to fund the loan at the specified rate and protects you against increases while your application is processed. A lender is required by RESPA to provide a Good Faith Estimate (GFE) within 3 business days of submitting a loan application. The GFE is a binding contract between the borrower and lender. If a lender refuses to provide you with a GFE, then they are not willing to fulfill their promises that they made over the phone regarding the terms of loan and interest rate.
Next, the loan orginator will send the loan application and all supporting documents to the loan processor to verify all information. Appraisal, title search, tax transcripts, and other items are ordered.
[IMPORTANT: The title company conducts a title search ASAP after receiving a copy of the sales contract. The lender usually orders the appraisal at least 2 weeks prior to closing. The earlier, the better. A delayed appraisal leads to a delayed closing.]
The loan processor sends the file to the underwriter for review. The file is reviewed and the underwriter issues a conditional loan approval letter to the borrower. All conditions must be met before the loan closes. The underwriter may require additional items from the borrower to meet the underwriting guidelines.
The underwriter prepares closing documents and sends instructions to the title company once all conditions are met.
The title company prepares the settlement statement (called a HUD 1) for lender approval. This form is usually provided to the buyer and seller at least 24 hours before closing. It shows how the money was disbursed between the buyer and seller.
The borrower signs the closing documents for the loan. The loan is funded and the deed is recorded. Texas is a table funding state, which means loans are funded on the same day of closing (usually later in the day if your closing is in the morning). If your closing is in the afternoon, funding may occur the next day.
Finally, once the loan funds and the deed of trust is recorded at the county clerk's office (in the county where the home was purchased), the home is YOURS.
Rosie Moore
Keller Williams Southwest
Cell: 281-703-6901
Email: rosannemoore78@gmail.com
Website: www.richmondtxhomesales.com
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