Loan Process

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Pre-Qualification

Pre-qualification starts the home loan process. Once a lender has gathered information about a borrower's income and debts, a determination can be made as to how much the borrower can pay for a house. Since different loan programs can cause different valuations, a borrower should get pre-qualified for each loan type the borrower may qualify for.

In attempting to approve homebuyers for the type and amount of mortgage they want, mortgage companies look at two key factors. First, the borrower's ability to repay the loan and, second, the borrower's willingness to repay the loan.

It is important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, your stronger point could make up for the weak one. Mortgage companies could not stay in business if they did not generate loan business, so it is in everyone's best interest to see that you qualify.

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The Application

The application is the true start of the loan process and usually occurs between days one and five of the start of the loan process. With the help of our team, you will complete the application and provide all required documentation. Required documentation includes:

  • If you are salaried, provide the past two years' W-2s and one month of pay-stubs
  • If you are self-employed you will need to provide the past two years' tax returns
  • If you own rental property, you will need to provide Rental Agreements and the past two years' tax returns
  • To speed up the approval process, provide the past three months' bank, stock, and mutual fund account statements
  • Provide the most recent copies of any stock brokerage or IRA/401k accounts that you might have
  • If you are requesting cash-out, you will need a "Use of Proceeds" letter of explanation. Provide a copy of the divorce decree if applicable.
  • If you are not a US citizen, provide a copy of your green card (front and back), or if you are NOT a permanent resident provide your H-1 or L-1 visa.
  • If you are applying for a Home Equity Loan, you will need, in addition to the above documents, to provide a copy of your first mortgage note and deed of trust.

The various fees and closing cost estimates will have been discussed while examining the many mortgage programs and these costs will be verified by the Good Faith Estimate (GFE) and a Truth-In-Lending Statement (TIL) which the borrower will receive within three days of the submission of the application to the lender.

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Processing

Once the application has been submitted, the processing of the mortgage begins. The processor orders the credit report, appraisal, and title report. The information on the application, such as bank deposits and payment histories, are then verified. They will check for any credit derogatories, such as late payments, collections, and/or judgments that require a written explanation. The processor examines the appraisal and title report, checking for property issues that may require further investigation. The entire mortgage package is then put together for submission to the lender.

Appraisal Basics

An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value; the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value. There are three common approaches to estimate value:

  • Cost Approach

  • Comparison Approach

  • Income Approach

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Underwriting

Underwriting means a loan package is going through the verification process.

Once the processor has put together a complete package with all of the documentation, the file is sent to the lender. The underwriter verifies all of your documentation (like income, assets, and debt) to determine whether the package is acceptable for a loan. Once accepted, the loan is submitted, and moved into an "approved" status.

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Closing

Closing is where the borrower sits down and signs on the dotted lines to become the owner of their new property!

The loan has been approved by the underwriter and the borrower is given the exact amount for broker and closing fees. The borrower and lender schedule a time to sign the closing documents.

At the closing the borrower should:

  • Bring a cashier's check for your down payment and closing costs. Personal checks are normally not accepted and if they are they will delay the closing until the check clears your bank.

  • Bring identification and proof of insurance with them.

  • Sign the loan documents. There will be lots of signatures!

For many borrowers closing day can be a major life event, and is something to be celebrated. They have completed the process of securing their loan, and signed to become the owner of their new property!

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Work With Our Experts Today

The Force Group can help ensure that the loan process is as simple as possible for you. We will work with you to find the right loan option and help you get the loan you need. Contact us today to get started or to get your questions answered.

Loan Process

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