Discover the Steps in Obtaining a Mortgage
Prequalification
"Prequalification"
occurs before the loan process actually begins, and is usually
the first step after initial contact is made. In a prequalification,
the lender gathers information about the income and debts
of the borrower and makes a financial determination about
how much home 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
prequalification for each type of program you are suited
for.
Opening The File
This usually occurs between
days three and 10.
At this time the lender orders
a property appraisal, property survey and credit reports,
mails out requests for verifications, if necessary, for
employment (VOE) and bank deposits (VOD) and any other documents
needed for processing of the loan.
All information supplied
by the borrower is reviewed at this time and a list of items
not yet received is compiled.
Processing
Processing usually occurs
between days five and 25 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"
usually occurs between days 15 and 25. The underwriter is
responsible for determining whether the combined package
passed over by the processor meets all the lender's criteria.
If more information is needed, the loan is put into "suspense"
and the borrower is contacted to supply more documentation.
"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
to the mortgage company within 48 hours.
Pre-Closing
"Pre-Closing" usually
occurs between days 20 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 30 and 45 of the loan. 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.
Closings occur at different places in different states.
For instance, some states require that the closing take
place at a closing attorney's office while others use a
title or escrow company.
