Financing

 

 

Steps To Obtaining A Loan 




Step 1: Pre-Qualification

Financing the purchase of a home normally begins with pre-qualifying for financing. The pre-qualification process involves the review of specific financial information including your income, assets, debt, source of cash for a down payment, credit and employment history. During the pre-qualification process, your lender or mortgage broker can help determine the approximate loan amount and purchase price for which you may qualify. In some cases, you may want to include your accountant and/or tax professional in the process.


Step 2: Pre-Approval

In a market with many qualified Buyers and a limited number of properties, it becomes increasingly important that you obtain pre-approval. Since pre-approval strengthens your buying position greatly, you should not start your home search until receiving a formal pre-approval. A pre-approval involves obtaining a completed loan application and verifying information you provide about your income, assets, debts, and credit history with supporting documentation such as pay stubs, tax returns, bank statements and credit reports.


Step 3: The Loan Application

A contract has been accepted and this is what happens if none of the pre-approval activity has happened yet.  The process begins with the initial interview where the lender obtains an application and evidence of income and assets. Lender also opens escrow with the title company.


Step 4: Ordering Supporting Documentation

Within 24 hours of application, the lender requests a credit report, an appraisal of the property, verifications of employment and funds to close, mortgage or landlord ratings, a Preliminary Title Report and any other necessary supporting documentation.


Step 5: Collection of Documentation

Within one or two weeks, the lender begins to receive the supporting documentation. The lender checks it for accuracy and completeness and requests any additional verifying items needed.


Step 6: Loan Submission

Once all the necessary documentation is in, the loan package is assembled and submitted to the underwriter for approval of the loan. At this juncture, the loan agent issues a pre-approval letter to you or your Realtor. That letter is typically submitted to a Seller along with the purchase offer.


Step 7: Loan Approval

Within 24 to 72 hours after submission, all parties are notified of the approval and any loan closing contingencies are cleared. You receive an estimate of closing costs from the lender. The closing process begins.


Step 8: Loan Documents Drawn

Within one to three days after the loan approval, the loan documents are completed and sent to the title company. You then sign the final documents and are told how much money is needed to close the loan. In some cases, the Buyer receives the funds.


Step 9: Funding

Once all of the loan documents are signed, the lender reviews them. When the forms are properly executed, a check is issued to fund the loan.


Step 10: Recordation

The title company must then record the legal documents necessary to transfer the property into your name. Also, the deed of trust is recorded to show the new loan on the property. Escrow is now officially closed and you own your home.