The Loan Process

The home loan process can be as easy as 123 but if not properly prepared, this process can turn into a nightmare.  When shopping for a home loan, remember to shop carefully for not only the best rate and closing costs but also for a knowledgeable and experienced agent.  The home loan is the most important part of a home buyer’s transaction when a mortgage is involved.  Many contracts that you enter into are strict in that they only allow a short specified time for closing and if your mortgage is not prepared properly then you may experience a closing delay or the loss of a great home buying opportunity.  In the following article we will review the loan process and what variables control your loan consideration.

The loan process is relatively simple.  Your loan may have already been pre-approved.  This means that a lot of your information was already reviewed by the loan officer and the preliminary decision that you will qualify for a home loan.  Here is the basic loan process after you select a home for purchase;

  1. Signing and returning  the loan application (1003) (Day 1)
  2. Submitting updated financial info which includes 2 Years of Tax Returns with W2’s, Paystubs, Bank Statements, Copy of Driver’s License and Social Security Card, Purchase Agreement, Copy of Earnest Money Deposit (EMD) (Day 1)
  3. Loan Officer orders title (Day 2)
  4. Loan Officer submits this information to the bank (Day 5-7, delay due to waiting for results of home inspection)
    Appraisal is ordered (Day 7)
  5. Conditional Loan Approval received from Lender (Day 7-14)
  6. Obtain home insurance (Day 7-14)
  7. Loan Conditions are cleared (Day 10-17, usually takes about 3  days to obtain conditions for condition clearing  and then 4 more for the Underwriter to clear them off the conditional approval)
  8. Once the Clear to Close is received  from the lender then Schedule a Closing Time with the Lender, Title Company, Buyer’s, and Seller’s (Day 17-20, after Clear to Close, takes Bank up to 3 days to prepare and coordinate closing)
  9. At Closing, funds are wired from the Bank to the Title Company.  You then sign a large package of documents for your mortgage loan and some additional papers to convey ownership of the home to Buyer (Day 21)

*Day Estimation Above Are Business Days and Do Not Include Weekends and Holidays

Now that you have a general idea of the loan process, here are some key things to look for that might make your loan easier to close.  By paying closer attention to your current financial situation and understanding the loan process, you may make getting a home loan a bit easier.  Here is some helpful insight;

  1. Your normal allowable DTI (debt to income ratio) can not exceed 45%.  This means that all reporting monthly payments on your credit report plus your total PITI (Principal+Interest+Taxes+Insurance) on your proposed home can normally not exceed 45% of your gross monthly wages.  When self-employed or commission based, proving stable income can be a slippery slope because other factors come into play so make sure to consult your loan officer about the underwriting rules that may apply.
  2. Your down payment for the home must be seasoned in the bank for a 2 month period.  Any new funds that have been deposited into your account within the past 2 months must be sourced.  Sourcing funds means tracking where they’ve come from.  Seasoning of funds refers to the time they’ve remained untouched in your bank account.
  3. Gift funds for down payments or closing costs are normally allowed only if from a family member.
  4. Certain factors may add to your layered loan risk and may cause your loan to be denied.  These risks include; high DTI, inadequate funds in reserve accounts, job instability or lack of continued employment for a long period of time, previous bankruptcies or foreclosures, etc..  Keep in mind that if you have a combination of these items, your loan may be declined.
  5. If you are buying a condo, make sure financing is available on that condo project.  Conventional and FHA Loans have very particular rules on which condo projects are available for financing.
  6. Outstanding collections and judgments have to be paid off most of the time to obtain any type of financing.
  7. Your credit score may be high but make sure that you have the required 3 trade lines on your credit report needed for financing.  For a home loan, you normally need 3 trade lines that have been reporting for a 1 year period with a good credit history and they must be open and active credit lines.

These are just a few things to keep in mind when preparing to apply for financing so try and follow these helpful suggestions to make getting your new home loan a simple and happy process!

| 100-101 | | 9L0-012 | | 642-999 | | 300-115 | | MB5-705 | | 70-461 | | 810-403 | | 200-120 | | 400-101 | | CISSP | | 300-320 | 200-120 210-260 200-310 SY0-401 810-403 300-320 400-101 70-533 N10-006 MB2-707 810-403 200-120 400-101 CISSP 300-320 350-018 810-403 200-120 400-101 CISSP 300-320 350-018 300-101 210-260 300-208 MB2-707 400-201 SY0-401 70-462 EX200 100-101 1Z0-803 200-120 210-260 200-310 SY0-401 810-403 300-320 400-101 70-533 N10-006 MB2-707 1Z0-060 400-051 300-075 MB2-704 100-101 MB2-704 100-101 9L0-012 642-999 300-115 MB5-705 70-461 1V0-601 300-206 352-001 70-486 300-135 NS0-157 PR000041 300-101 70-346 810-403 810-403 200-120 400-101 CISSP 300-320 350-018 300-101 210-260 300-208 MB2-707 400-201 SY0-401 70-462 EX200 100-101 1Z0-803 300-208 MB2-707 400-201 SY0-401 70-462 EX200 100-101 1Z0-803 9L0-012 70-480 200-310 EX300 ICBB 1Z0-808 AWS-SYSOPS 1Z0-434 200-120 210-260 200-310 SY0-401 810-403 300-320 400-101 70-533 N10-006 MB2-707 210-060 400-201 100-101 9L0-012 642-999 300-115 MB2-707 400-201 SY0-401 70-462 EX200 100-101 1Z0-803 9L0-012 70-480 200-310 EX300 ICBB 1Z0-808 AWS-SYSOPS 1Z0-434 810-403 200-120 400-101 CISSP 300-320 350-018 300-101 210-260 300-208 MB2-707 400-201 SY0-401 70-462 EX200 100-101 1Z0-803