Overview of the Loan Process

Pre-Qualification

Pre-qualification occurs before the loan process actually begins,
and is usually the first step after initial contact is made. The
lender gathers information about the income and debts of
the borrower and makes a financial determination about
how much house the borrower may be able to afford.
Different loan programs may lead to different values, depending
on whether you are qualified for them, so be sure to get
a pre-qualification for each type of program you are suited for.

Application

The application is actually the beginning of the loan process
and usually occurs between days one and five of the loan.
The buyer, now referred to as a "borrower", completes
a mortgage application with the loan officer and supplies
all of the required documentation for processing. Various
fees and down payments are discussed at this time and the
borrower will receive a Good Faith Estimate (GFE) and a
Truth-In-Lending statement (TIL) within three days that itemizes
the rates and associated costs for obtaining the loan.

Processing

Processing occurs between days 5 and 20 of the loan.
The "processor" reviews the credit reports and verifies the
borrower's debts and payment histories as the VODs and
VOEs are returned. If there are unacceptable late
payments, collections for judgment, etc., a written
explanation is required from the borrower. The processor
also reviews the appraisal and survey and checks for property
issues that may require further discernment. The processor's
job is to put together an entire package that may be underwritten
by the lender.

Underwriting

Lender underwriting occurs between days 21 and 30 or sooner.
The underwriter is responsible for determining whether the
combined package passed over by the processor is
deemed as an acceptable loan. If more information is needed,
the loan is put into "suspense" and the borrower is contacted
to supply more documentation.

Mortgage Insurance

Mortgage insurance underwriting occurs when the borrower has
less than 20% of the loan amount to put towards a down payment.
At this time, the loan is submitted to a private mortgage
guaranty insurer, who provides extra insurance to the lender
in case of default. As above, if more information is needed
the loan goes into suspense. Otherwise it is usually returned
back to the mortgage company within 48 hours.

Pre-Closing

Pre-Closing occurs between days 25 and 30. During this time
the title insurance is ordered, all approval contingencies,
if any, are met, and a closing time is scheduled for the loan.

Closing

Closing usually occurs between days 25 and 45 of the
loan (depending upon the designated length of your escrow).
At the closing, the lender "funds" the loan with a cashier's check,
draft or wire to the selling party in exchange for the title to the
property. This is the point at which the borrower finishes
the loan process and actually buys the house.