Exposé: Inside the Loan Process
If you’ve ever bought a home and went through the loan process, there is probably a little date stuck in your head that you won't forget: the closing date. Before you began the process, it’s likely that you didn’t realize the grand significance of that date.
When it all started falling into place and the process began to take a little longer than you thought, frustration might have kicked in. We’d like to elaborate a little on the delicate balance that is the mortgage loan process.
(Hey, first-time homebuyers, sorry if we lost you there! It’s okay if you are unfamiliar with this topic, but this is good to know before you begin your own loan process.)
If there is one thing you take out of this article: Be as compliant and cooperative with your Loan Officer as possible. You and your Loan Officer are a team.
Let’s begin by taking a quick behind the scenes look at the loan process. Pre-qualification is the very first step and technically takes place before the loan process begins. Right after you meet your loan officer for the first time, he/she gathers your information on income and debts. With this info, they determine the type of house you can afford. It is possible to receive various pre-qualifications because you may be suitable for more than one loan program. Here, you can already help streamline the process by communicating your interest in various loan programs to your loan officer. *Remind him or her to get you pre-qualified for every program you are suitable for.
Within the next five-or-so days, you will complete a mortgage application with your loan officer. This is where your teamwork counts! With the application, you are required to supply a handful of documents for processing. These documents include things like your employment history, proofs of identification, payment histories, etc. The list is long, but it is crucial to pay close attention to what is needed and communicate as much as possible with your loan officer. They are here to help you and if they’re good, they’ll care about your experience, too. By getting all of the right documents into processing at one time, it allows the processor to move the application along to the underwriter and get you to the closing date that much faster.
In processing, the processor goes through each individual document with their check-list. He/She will review credit reports and verify your debts and payment histories as they are receiving your VODs (validation of debt) and VOEs (validation of employment). They also review the appraisal of the prospective property and check for property issues that may require further judgment. It is the processor’s job to make sure the entire package is perfect and ready to be passed on to the next step, underwriting. If the processor is missing any documents or if there is a written explanation needed from you due to unacceptable late payments, collections for judgment, etc., the processor contacts your loan officer. At that point, the ball is in your court. The loan process is at a halt until you and your loan officer collect what is needed and get it back to the processor.
Once everything is in, the package is given to the underwriter who is responsible for determining if it is a complete and acceptable loan. He/She goes through everything and if anything is missing, you are directly contacted and the loan process is put on hold once again, which is called being put into ‘suspense’. Underwriting is one of the most important steps of the loan process and is often held up by missing material. The postponed closing date problem is often traced back to this step and can easily be avoided if you and your loan officer work together while preparing your material ahead of time.
The pre-closing step happens when the underwriter sends your completed loan application package over to the title company. This should only take about 5 days, at the most, and when all of the approval contingencies are met, if any, the official closing time is scheduled.
From there, the loan goes to closing, in which the funding takes place to officially obtain the title to the property. After the loan gets through closing, you do your final walk-through of the house, sign your papers, and officially buy the home!
Getting the inside scoop and understanding the details of how the loan process works should highlight the importance of your relationship with your loan officer. Getting through the process as quick and easy as possible benefits everyone; your realtor, your lender, your loan officer, your seller, your prospective neighbors, your forthcoming city, all of your future babysitters, the president of the Unites States, your Uncle Bob. Okay, maybe not all of those people are directly affected, but the most important person of all is you. A fast purchase is not always in your best interest, so be deliberate and thorough in the purchase of your home. The best way to do that is being a compliant and cooperative team with your loan officer. Embrace the teamwork, avoid the frustration.
Work with one of Union Home Mortgage’s qualified loan officers for a great purchase experience. Visit our website and obtain a quick pre-approval today!