The Loan Process | Buyer
The loan process is far different today than it was 10 years ago. Today, even the most qualified buyer will find the loan process time consuming and at times frustrating. The way to keep the process moving forward is to be prepared, and respond quickly when your mortgage broker requests additional information, verification of an asset, employment, or income.
Step 1. The Application
The key to the loan process going smoothly is the initial application interview. At this time the loan officer obtains all pertinent information and documentation so unnecessary problems and delays may be avoided. This is the best time to discuss loan programs best suited to meet the home buyer’s needs.
Step 2. Automated Underwriting
After the application is completed, the loan officer inputs the application into the automatic underwriting system. This is an automated financial evaluation program that analyzes the data from the loan application of the borrower, such as income, credit history, debts, property details, debt-to-income rations, etc. This process evaluates the borrower’s financial picture and makes a credit decision. In conjunction with this review, the loan officer requests a credit report run on the borrower(s).
Step 3. Requesting Documentation
The next step after receiving the initial lending decision is that the loan officer will request certain documents such as bank statements, W2’s (2 years), verification of funds, landlord details and any other supporting documentation that has been requested.
Step 4. The Home Buyer Goes into Contract on a Property
Step 5. Loan Submission
Once all of the necessary documentation has been acquired, the loan officer puts the loan package together and submits it to the underwriter for final approval. The final loan package includes the contract on the property, the property appraisal, preliminary title reports and any conditions that were identified in the automated underwriting process. The loan officer submits the final loan package to the underwriter for formal loan approval.
Step 6. Loan Approval
The underwriter reviews the contract, property appraisal and preliminary title reports and validates the conditions from the automated underwriting process. File disposition is achieved. Assuming all criteria are met, the loan is approved and/or other conditions may be requested as terms of funding.
Step 7. Rate Lock
The loan officer will discuss the loan programs available to the home buyer(s) in conjunction with discussing the final loan approval and conditions. Based on the outcome of the property purchase and final loan approval process, the buyer may wish to or need to review other loan programs. A final loan program decision is reached and the request for rate lock is made.
Step 8. Documents Are Drawn
After the loan approval, the loan documents (including the note and deed of trust) are completed and sent to the title company. The escrow officer calls the borrowers to come in when the papers are ready for final signature. At this time, the borrowers are told how much money they will need to bring in to close the loan.
Step 9. Funding
Once all the parties have signed the loan documents, they are returned to the lender, who reviews the package. If all of the forms have been properly executed, the funds are then transferred. At closing, the borrower must present a cashier’s check or arrange for a wire transfer of funds directly to the title company for the required closing costs and payments. No personal checks are accepted. Also, funding conditions must be submitted and satisfactorily met at this time.
In the Tahoe area it is important to know that the title company will need the original loan documents in order to record them. This can add an additional 3-5 business days onto the close of a transaction, so it is important for your loan officer to know that from the time loan docs are signed it will take extra time to get the original documents back up here to the Tahoe area, and then down to the county recorder.
This is different from major metropolitan areas due to the fact that documents are driven into the area and we have an early over-night cut-off time. Over night deliver can often mean 2 days here in Tahoe. While lenders are quick to say they can fund on a copy/fax of loan documents a title company can’t record documents that are not original, so the physical movement of the documents back here to the Tahoe area can impact on a closing date. Just a local FYI!
Step 10. Recordation
When the title company receives the funds from the lender, the title company makes the lender’s security for the loan a matter of public record. This is done by recording both the note and deed of trust at the County Recorder’s office. Escrow is now officially closed.
Need help in trying to figure out your Lake Tahoe – Truckee Home/Condo buying options?
Do you want to learn more about the different neighborhoods, locations, developments and their amenities, HOA fees and the ones that will best meet your needs? Call me at 530.414.1260 and I can help you find the right place to buy!
All information is deemed reliable, but is subject to change, and/or correction without notice.
Buyers and Sellers should investigate and verify all information to their own satisfaction.
The Loan Process | Buyer