The Mortgage Loan Process - 6 Steps
Step 1: Meet with a Lender for Pre-approval:
The
most important step before shopping for a new home is to make sure that
you qualify for the Financing you need. Completing this process early
is necessary and will help you negotiate favorably certain contract
items, the most important of which is your “Due Diligence Period.”
The Pre-Approval Process:
- Pre-approval will only take on average, 30-60 minutes over the phone.
1. Two most recent paystubs
2. W2 and/or tax return from last 2 years
3. Bank statements
- We
will discuss your income, credit, employment, and Financial situation
for down payment and assess payment options, interest rates and closing
costs.
Step 2 – Find a Home and Make an Offer:
Working
with your real estate professional, find the home you want to make an
offer on. Your real estate professional will work closely with your
lender to issue a pre-approval letter to submit with your offer and to
determine reasonable time frames for the “Due Diligence Period” required
in your contract.
Step 3: Contract Accepted , The Clock Starts Ticking:
Meet
with your lender immediately to sign all loan documents and disclosures
to ensure timely underwriting and loan approval before the end of your
“Due Diligence Period”. Items your lender may need are:
- A check for any fees required for appraisal, credit reports, flood zone certification or other required fees.
- Copies of Current Pay-stubs covering the most recent 30 days of earnings on your job.
- Copies of W-2 Forms for the last 2 years.
- If receiving social security or pension income, a copy of the “award” letter indicating the amount to be received.
- Copies of your complete Federal Tax Returns for the most recent 2 years (all schedules and all pages).
Copies of all assets statements (checking/savings, cd’s,
market accounts, stocks, bonds, mutual funds, IRA’s, 401k’s, etc) for
the recent 2 months and all pages to each statement are needed with
daily activity and balances.For any real estate owned, copies of documentation showing current taxes, insurance, and any hoa/condo dues.
- If divorced or separated, a copy of your complete divorce decree and/or marital separation agreement.
- For a VA Loan, a copy of the veteran’s DD214 (Discharge Papers).
- Job Relocations will require a letter from your employer stating your transfer date, job title, and salary
- Information, If “telecommuting” a letter indicating this is allowed by the company with no change in job status.
- Special
situations may dictate that other information is required, so
communicate well with your mortgage professional at all times.
Step 4 – Loan Commitment:
Once
your loan has been approved, a formal “Loan Commitment” will be issued.
This is the lender’s Commitment to lend you money at the agreed upon
loan terms. The Loan Commitment may have certain “conditions” attached
to it and it is very important that you work quickly with your lender to
satisfy these “conditions”.
Step 5 : Closing
Prior
to closing you will receive a copy of your closing statement detailing
your fees and charges and the final amount of money you need to bring to
closing. “Certified funds” such as a cashier’s check from the bank
made payable to the title company or a wire transfer directly to the
title company are required. Make sure to get instructions from the title
company or escrow officer in advance to initiate the transfer at least 2
days prior to closing. If you have to make arrangements to move money
around from one account to another do not delay. Make sure to leave
yourself enough time to secure available funds and to bring photo
identification, such as a drivers license.
Step 6 : Congratulations You’re a Homeowner!
