This section will give you a good Idea of the mortgage loan process and the time frame involved. The knowledge will help you feel more comfortable with your lender as you go through the loan process and will also help you spot any red flags along the way, if they should appear.
The type of loan you are applying for will determine the length of time required for the loan process in completing your loan. Different loan types require different documentation.
As an example, if you have good credit and lots of equity in your home and you are applying for a 2nd mortgage, the lender may not require an appraisal. If you are getting a Line of credit on your equity, that documentation can be completed with some lenders in a matter of days. If you qualify for automated processing (DU, or Loan Prospector) it is sometimes possible to close in less than 14 days.
Our Mortgage Loan Originators should walk you through the process up front so you will know what to expect. Typically, most loans take 2 to 4 weeks to close.
In Simple Terms the Loan Process is as follows:
1. We’ll connect and begin to guide you through the process!
2. We'll educate you on which loan best suits your situation.
3. We’ll pull your credit.
4. We’ll send you a good faith estimate, and then accept your deposit.
5. We’ll order your appraisal.
6. We’ll verify your income and other financial information.
7. We’ll process and underwrite your loan.
8. We’ll close your loan.
Here is the mortgage loan process in more detail:
· The mortgage application process is where you fill out the application, sign various forms that authorize the lender to process your loan, and deliver your documentation requirements. (Bank statements, pay stubs, W2s, etc…) Obviously if you are doing this through the mail it can take a week or more, but if you go into the office it usually only takes an hour or so. You should understand that the next process cannot begin until these documents are completed and or received.
· When all of your documentation is received, it then goes to a processor who verifies and validates all of the information to be true and correct. Verification requests may be sent to your employers, mortgage holder/landlord and lending institutions. This is done by fax when possible. It is usually during this time frame that the appraisal and the title policy are ordered.
· When all the information is collected, the processor then verifies that basic lender loan requirements have been met. The file is then packaged in a manner that the lender specifies. The completed package (including the appraisal and title report) is then sent to the underwriting department either in house or to a lender-specified location.
· The processing of your loan usually takes about 1-2 weeks, but it can often be delayed when third parties do not respond to the validation requests or if appraisals are delayed. If your loan qualifies for DU (Desk top Underwriting) or Loan Prospector, these are computer automated systems, the documentation requirements are often cut in half and the process can be completed in three to five days depending on the volume of loans the processor has.
· The underwriter reviews your loan package to make sure it conforms to all the guidelines required for that loan product. They also review the appraisal and title report and may do additional validation of employment, mortgage payments, and credit. They may also review anything else they deem necessary to document your loan. They have ultimate power and decision authority over the approval of your loan. The time required to do this is driven by the volume in the market. If the market is flooded, I have seen it take 2 weeks, but under normal conditions it only takes 3-5 days.
Conditions to Close
· When the underwriter is done reviewing your loan, she will send "conditions to close" to your loan officer. These are normally just requirements for further documentation to support your file. When these needs have been satisfied, the underwriter will give a final approval and "clear to close".
Clear to Close
· When the loan officer gets the clear to close, he or she will then schedule and coordinate with all the parties concerning the time and location to sign the final documents in which close the loan. This normally only takes an hour to schedule.
· When everything is scheduled, the lender then draws the document package and sends it to the closing company. This can be done by overnight delivery, fax, or electronically. It can take 1-2 days. You meet, sign the papers, and pick up the keys.
Now you can go and enjoy the American Dream of Home Ownership!