UNDERSTANDING THE LOAN PROCESS :
Pre-qualification:
We encourage buyers to get pre-qualified for a mortgage so they’ll know in advance how much house they are comfortable with.
The Hunt:
Now that you know your house budget, shop for a house. When the right one is found, the terms of the sale are negotiated, including the sale price and often the type and conditions of the loan being sought.
Loan Application:
To ease the loan process, provide accurate and complete information.
Documentation:
Supporting paperwork includes pay stubs, two years of tax returns and account statements verifying the source of down payment, funds to close and reserves.
Appraisal:
An appraisal is always required. It’s important that the home’s sale price is consistent with the appraised value.
Title Search:
This is the process when any lien against the property is discovered. All liens must be cleared before a loan transaction can be completed.
Termite Inspection:
Most purchase loans require an inspection for termite and water damage. Some problems may need to be repaired before finalizing the sale.
Processor’s Review:
Our processors package all pertinent information to be sent to our underwriter. The underwriter makes the final decision on whether a loan is approved.
Mortgage Insurance:
It’s not unusual for mortgage insurance to be required when the borrowers put down less than 20%. The standards of the mortgage insurance carrier can be different that those of the mortgage lender. Therefore, sometimes, even if the loan meets the lender’s requirements, the insurance company could choose to deny coverage.
Approval, denial or counter offer:
If the loan is denied, sometimes approval can be achieved when the borrower increases their down payment to improve their debt to income ratio.
Insurance:
Lenders require fire and hazard insurance based on the replacement value of the mortgaged house. Flood insurance will be required if the house is in a flood zone and in California, earthquake insurance is required on condominiums.
Signing:
Final loan and escrow documents are signed and notarized.
Funding:
The lender sends a wire or check for the amount of the loan to the title company.
Close of Escrow:
Documents transferring title are recorded with the Country Recorder.
Confirmation of Recording:
Once escrow is closed, the title company then authorized the escrow company to draft a check to the seller.
Buyer begins making mortgage Payments. |
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WHAT LENDERS LOOK FOR IN HOME LOAN APPLICATIONS:
Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. My team and I have a streamlined loan process to help you get your ducks in a row prior to this review. A grand slam loan package is in perfect order and answers all the important questions up front. We know what the lenders are looking for, based on long-term relationships with them and extensive knowledge of guidelines for a multitude of loan programs that are available today.
What is the lender looking for when they review loan applications?
The lender wants to know about your personal financial picture, including savings and credit history and your employment stability. The co-borrower’s history is also taken into consideration. The lender also considers the loan amount and the appraised value of the home you are looking to purchase. Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.
What can I do on my end to make it easier?
Before taking out a home loan it helps to establish a consistent record of paying your bills on time. If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner. We can help you evaluate your debt-to-income ratio to determine what mortgage payment will be comfortable and affordable for you on a monthly basis. Aim for having enough savings to cover your down payment, closing costs if necessary, and two month’s expenses in case of emergency. We’ll help you find the loan program that works for you.
If I just started a new job six months ago, can I still apply for a loan?
A stable employment history is important, but the lender does take human factors into consideration. If you’ve recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are normal in your field, there are loan programs that can work with your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years. Consistency is the key word in the lender’s mind. But know that lenders have developed many different loan structures to meet the needs of the general public. When your grandparents bought their first home, they probably put 50% down and made a lump sum payment when the note was due. Times have changed, and so have loan programs. My team and I stay on top of current mortgage trends. We monitor rates daily and have a support network of Realtors, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance. |
