Intimidated by the loan process? We understand, and we have your back. Here’s a brief rundown of what to expect when getting a mortgage loan. Keep in mind that each loan is unique, just like every person is unique, and because of this, the loan process may need to adapt to the individual we are working with. This is a general idea of the loan process.

Application

This is the very first step! When a new potential borrower is ready to see what they can qualify for, it is time to take the guesswork out of the way and fill out an application. Be as detailed as possible. Your Loan Officer will call with questions once they receive your application. This is normal and allows you to share details they need to understand your financial situation. Learn more about what not to do before and during the loan process.

Credit and Prequalification

Upon receipt of the application, your Loan Officer will “pull” credit. We pull all three bureaus, which include TransUnion, Equifax, and Experian. Once we have your credit score, the Loan Officer can start figuring out which program (FHA, USDA, VA, or Conventional) is the best option for you. Once they have narrowed it down, they will work with the consumer to go through the potential options and terms. At this point, a Prequalification letter can be issued. This prequalification letter will be used to show the Realtor, Seller, or other interested party that you have applied for a loan, and we have determined that you qualify.

Contract

House hunting can be fun! It can also be exhausting, but once you find the home you love, it’s time to write the contract. Hopefully, you have a Realtor to help you with this. If there are no Realtors involved, then we suggest having a Real Estate Attorney to assist you. If you’re writing the contract yourself, there’s nothing wrong with that. Representing yourself is more than acceptable; remember, this is a legal and binding contract. Once both parties have accepted the terms of the contract, it needs to be sent to your Loan Officer.

Initial Disclosures

This sounds unpleasant, but it really is not. It will be a lot of reading on the borrower’s part. Using an electronic delivery service, we will send you a packet of disclosures that will outline the terms of the loan you are applying for, along with an estimate of the closing costs. There are many disclosures included that cover mortgage insurance, homeowners’ insurance, fees, and other program-specific details. Your Loan Officer will be available to answer any questions you have. Do not hesitate to ask your questions. We want you to understand and gain knowledge about the loan you will be getting. If you are more comfortable signing the disclosures in person, your Loan Officer can accommodate this if you are located in their branch area.

Needs List

This is our term for the list of documentation we need from a borrower. By this point, you may already have provided several documents to your Loan Officer as part of the prequalification request. Unfortunately, most documents do expire according to our underwriting guidelines and must be updated every 30 days or so. Your Loan Officer will give you a list at this time for any documents needed with the goal of getting your loan into underwriting within 2 – 3 days from the time you sign your loan disclosures. This can only happen with your assistance. When you are presented with a Needs List, please return the items to your Loan Officer as soon as possible. Within 48 hours is ideal to keep the loan moving to meet closing deadlines. Delays in getting documentation from our borrowers have the potential to cause us to miss closing date deadlines.

Processing

Now that the Initial Disclosures are signed and the items requested on the Needs List are being received, the file is sent to our Processing Team. Our Processing Team will order an appraisal, title commitment, verification of employment, and complete a bunch of other tasks needed by underwriting. This step is when all the information contained in the application is validated and confirmed. Questions may arise at this step, and if they do, your Loan Officer or their Assistant will reach out to you for more information. It is also possible that the Processor determines further documentation is needed based on the reports they pull or information that is updated as the file progresses. Please provide the information we need as soon as possible to keep things moving forward.

Underwriting

This is the step that the Loan Officer and Processor have prepared the file for! The underwriter is the final decision maker on the loan application. They will review the file once the processor has it ready to send to them and determine if the file will be approved, suspended, or denied. We rarely see denials at this point, but it does happen on occasion. Approved with conditions is the normal outcome of the underwriting review, the first time they see the file. A suspended file only happens when the underwriter cannot calculate the income, and that is usually due to a missing piece of documentation that helps them understand the income clearly.

Approved with Conditions

This means the underwriter found your file to meet the program guidelines but needed more information to clarify or document the circumstances related to your application. Your Loan Officer or LOA (Loan Officer Assistant) will provide you with a new “Needs List’ outlining what is needed from the borrower to meet the conditions. Again, timeliness is important! The faster we get the needed information, the faster we can get the file back into underwriting!

Underwriting (resubmission)

The underwriter will review the file with the new information provided and determine if it clarifies the points they needed or if it presents new information that triggers additional conditions. If all are satisfied, the next step will be final approval. It normally takes 2–3 times in front of the underwriter to clear all conditions. The borrower may not know when the underwriter touches the file, as we may be working on appraisal or title conditions.

Initial Closing Disclosure

Just before the loan is sent back to underwriting for final approval, the ICD (Initial Closing Disclosure) will be prepared and sent to the borrower for review. The ICD is step 1 of 2 of the Closing Disclosures that the borrower will review. This initial one will contain the closing figures that we have gathered from invoices and statements, showing the preliminary final figures as we know them. Usually, we are very close to what the final CD figure will be for cash to close. This form needs to be signed by the borrower(s) and returned to the Loan Officer before we can schedule the closing. This will be sent out via electronic delivery unless the borrower has a different preference.

Final Approval

Also known as the Clear to Close, this is one step closer to closing the loan. This means that the Underwriter has cleared all outstanding conditions and provided final approval. Your Loan Officer is now ready to wrap this up and will start notifying all parties to coordinate the closing date and time.

Closing Confirmation

This step will all happen internally. We will set up the closing with our Closing Department and the title company, and start the process between these two for the preparation of the Final Closing Disclosure. During this stage, the closing instructions and documents will be sent to the Title Company in advance of the actual closing.

Closing Day

Congratulations! You have become a homeowner! Make sure you take your Driver’s License to the closing along with a cashier’s check for any funds your Loan Officer told you would be required. Prepare for about 30 – 40 minutes of reviewing documents and signing papers. As part of this process, our Funding team will review a specific list of documents to make sure they were signed and dated correctly. You will be asked to wait while we do this, as we don’t want you to have to come back in to sign a document if possible. Overall, the closing process should take about an hour to an hour and a half, depending on questions that may be asked and the discussion that occurs at the closing table. Again…ask questions! We want you to understand your loan!

First Payment

Your first payment will be due anywhere from 30 to 60 days after you close. In your packet from the title company, you will find a “Payment Letter to Borrower.” Make sure you find this and put it with your bills to pay. It will identify where to send the payment and the due date.

We hope the process was painless and educational. With all the rules and regulations, the process can be very frustrating for consumers. We understand and recognize this fact. We’ll try to keep it as simple as possible and explain the steps so you don’t feel lost. Although we may ask for documentation throughout the loan process, please know that we will only request what is necessary to complete the loan. It is very helpful if borrowers forward their pay stubs and bank statements as they become available, as the underwriter will always want the most updated versions of these documents.