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Ever Wonder What Happens During a Home Loan Approval Process?
There are many steps that go into the loan approval process when applying for a home loan. Below I will list out just some of the many steps a loan goes through from start to finish:
First you make your application by providing the lender with your income, asset, and credit information. Some people will do this while in the process of shopping for a home and others will do this as soon as their offer is accepted on a property. On a refinance, this is simply when the information is provided to your lender.
There is quite a bit of work and time put into processing the loan approval so it is a good idea to commit to a lender within a few days of the application if you haven’t already done so. In fact, waiting too long to choose a lender on a home purchase could cause a delay in closing on your home and could put the purchase at risk if you are not able to meet the contract timeframes.
The first activity for the lender is to send you disclosure forms which will include a good faith estimate. On a purchase transaction, it is critical for lenders to be able to verify the escrow and title fees with the escrow company ASAP, preferably within 24 hours of the accepted offer to help provide more accurate disclosures. You will want to have your agent provide the escrow contact information to your lender right away.
All of your documentation will be turned over to a loan processor who will re-review your income calculations and review your submitted paperwork. At this time you may be asked for additional paperwork the processor sees missing that the underwriter would need or ask about. This is also the time that verifications of employment may be requested, updates or corrections to the credit report requested, and the preliminary title report requested.
Once you return your signed disclosures, your appraisal can be ordered and your tax returns verified with the IRS. Also once the remaining paperwork is received, your loan will be submitted to the underwriter. During this time you will want to start shopping for home owner’s insurance and provide your lender with the written quote for the company you want to use (if purchasing a home). During this time escrow will be ordering any existing loan payoff information that currently exits on the property.
Once your loan is approved, the underwriter will provide another list of additional paperwork required before closing your loan. You will want to provide any additional requested items as soon as possible. Your appraisal should be coming back in around this time as well.
After the remaining paperwork is received, such as your loan conditions, appraisal and items from escrow, your file is submitted back to the underwriter for final review. If everything is satisfactory, the underwriter will clear all the conditions and your final loan documents will be ordered. The lender will send your final loan documents to escrow and they will contact you for signatures.
Once the final loan documents have been signed, the documents are returned back to the lender, and you will need to transfer your funds to escrow. At this stage there may still be a few remaining items needed from escrow, such as the final certificate of insurance and seller signed paperwork. These items are quickly obtained and sent to the lender from escrow. Once everything is received and complete, your loan is scheduled for funding. In some cases the loan will record and close on the same day and sometimes the recording will happen the following day. If your loan is a refinance for your primary home, 3 days must pass from your signature date before your loan can fund.
On a refinance, it is typically your lender that will contact you and confirm that everything is closed. On a home purchase, title will contact the Real Estate agents involved and your agent will typically contact you to let you know that everything has been recorded and closed and coordinate a time for you to pick up your keys!
If you would like straight forward, comprehensive feedback on the home financing options available, please call Julie Ozanich at 858-369-7510. NMLS#: 479603.
With a mission to provide a higher standard of mortgage lending services, Julie began her career in mortgage banking in 1990. To date, Julie has successfully closed over $1 billion in mortgage loans and helped over two thousand customers achieve their mortgage goals. Program availability may differ slightly in different states. Terms may vary. Subject to change without notice. Bank of Manhattan is not affiliated with nor endorses The Carmel Valley Life. NMLS# 401422.