What Does the Mortgage Process Look Like?

By
Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141

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.

Easy Mortgage Process

     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. 

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Maria Sapio 03/02/2017 05:19 AM
Topic:
Lending / Financial
Groups:
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Rainmaker
2,625,686
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

This will be good to know further down the line for me in my own home-buying journey.

Mar 01, 2017 10:49 PM #1
Rainmaker
2,575,327
Nina Hollander
Coldwell Banker Residential Brokerage | Charlotte, NC - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Nice explanation, John, of a process that is always a bit of a mystery to borrowers (and even to some agents).

Mar 02, 2017 05:03 AM #2
Rainmaker
416,211
Maria Sapio
Berkshire Hathaway Homesale Realty - Carlisle, PA
Real Estate Agent- Carlisle, PA. Mariasapio.com

What a terrific post John Meussner - You've outlined the process so simply and offered clarity to a subject that frightens so many people.
Of course, everyone loves to receive the 'Clear To Close' phone call and it's thanks to amazing people like you that diligently work behind the scenes to make it happen...

Mar 02, 2017 05:12 AM #3
Rainmaker
4,177,226
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the post. I will bookmark it and share with others 

Mar 02, 2017 05:44 AM #4
Rainmaker
536,146
Nathan Gesner
American West Realty & Management - Cody, WY
Broker / Property Manager

It's an involved and difficult process for outsiders to understand. Good post, John Meussner 

Mar 02, 2017 06:00 AM #5
Rainmaker
357,910
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

John, thanks for sharing a great explanation of the Mortgage Process.

First time home buyers and Seniors often do not have a clue and need to have careful explanation. Your post gives the information that can be a great guide.

Thanks

Mar 02, 2017 06:21 AM #6
Rainmaker
670,346
Nick & Trudy Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

Well laid out plan for how you handle your transactions so the consumer knows what to expect.

Mar 02, 2017 09:11 AM #7
Rainmaker
683,897
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Would always suggest to anyone in the market to contact a trusted direct lender representative or mortgage broker for personalized service, going over the real realities of a mortgage for the best possible outcome.

Mar 04, 2017 12:37 AM #8
Rainmaker
515,720
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Nov. 2017, two years after TRID implementation, here's my observation:

  • It holds loan officers accountable to their initial offering of terms and costs, which in turn helps reduce last-minute surprises to the buyer.
  • It adds 3 to 5 days or more to the closing process.
Nov 25, 2017 09:14 AM #9
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