THE APPLICATION
PROCESSLet’s follow your mortgage application. Where does
it go? Who sees it? And why?
For the first time homebuyer,
and even for many veteran homebuyers, the mortgage application
process can hold many mysteries and can often be stressful. Let’s
shed some light on the process. The more you know about what to
expect, the less stress you’ll experience.
Your mortgage
application.
If you desire a face to face interview, one of
our loan officers will meet with you to start the
mortgage application process at a time and
location that is convenient for you.
The
mortgage application requests information about
the borrower(s) on the loan, including you, your spouse (if
applicable), and co-borrowers (if any). The information you
provide will help us recommend the loan that best suits your needs
and financial situation. It’s very important to be complete and
accurate, so that differences between the application and the
documents collected by us don’t cause delays as you get closer to
funding.
 Usually we will be able to use the information you
provide on your mortgage application
to "pre-qualify" you. That means you’ll learn, based on your
income and debts, just how large a loan you can qualify for: It
shouldn’t be considered an approval, but can be helpful in
determining how much house you can probably afford. In addition,
we can arrange a "pre-approval" with a lender - which is actual
loan approval for a specific loan amount, contingent on a property
appraisal only. With loan pre-approval, you already know you’ll be
approved for your loan before you start shopping for your home.
Check with us for more information about loan
pre-approval.
What a lender
needs to know.
Lenders need to consider five key factors in
determining whether or not they are able to approve your
loan:
-
INCOME. The lender needs to feel confident that
you earn enough money to pay your mortgage.
-
DEBT. The lender needs to know that your other
bills (not including utilities and taxes) will allow you to pay
your mortgage.
-
CREDIT
HISTORY. The lender wants to see that you have a history of
paying your bills on time. And if you haven’t been able to, the
lender looks for a reasonable explanation.
-
CASH. The lender needs to be assured that you have
enough cash to make the down payment and cover closing
costs.
-
PROPERTY VALUE. The lender needs to be sure that
the property you are buying is valuable enough to support the
sale price.
The
mortgage application has sections that address all
five factors.
After your loan
application is complete, we will begin the process of collecting
the documents required to support the information on the
application.
First, we will
obtain a Credit Report, usually from one of the major credit
reporting agencies.
Second, we
will send a Verification of Employment (VOE) form to your
employer(s) to verify your salary and employment
history.
Third, we will
send a Verification of Deposit (VOD) form to your savings
institution(s) to verify your savings.
Fourth, a
professional appraiser will visit the property to determine its
value, taking into consideration location, zoning, and size, as
well as the sale price of similar properties in the same
neighborhood. This is known as a Property
Assessment.
We
may also need to obtain other documents, including:
A Gift Letter
– If any of your down payment is to be in the form of a cash gift
from a relative, you’ll need a letter from that relative
explaining that the cash is a gift and no repayment is expected.
(There are usually limitations regarding the percentage of the
down payment that can be a gift. We will be able to provide
details.)
Other Sources of
Income – If you receive income from sources such as rental
property, social security or disability, alimony, and/or child
support, we will need to document these.
Self-Employment
Information – If you’re self-employed, lenders need tax
returns, financial statements, and a profit and loss
statement.
Investment
Income – If you earn any income from investments or dividend
income, you’ll need to provide these records.
Divorce Decree
– If applicable.
Within three
business days of receiving the application, we will provide you
with a "Good Faith Estimate" of the anticipated closing
costs. These costs include origination fees, points, mortgage
insurance, title insurance, escrow reserves, hazard insurance,
miscellaneous lender fees, and our fee.
You’ll also
receive a Truth-in-Lending Disclosure. This will show you
the estimated monthly payment and the total cost of all finance
charges.
 What’s next?
We will send your
completed loan application to the lender that offers the best loan
at the best rate for your particular situation.
Then, the lender’s
underwriter will review the package and all the documents to make
a decision on your loan.
Sometimes the
underwriter will have questions or need additional information
from you in order to completely review your loan. We can usually
help you resolve any issues that may arise.
After the
underwriter approves the loan, you will receive a commitment
letter which spells out the terms of the loan and the length of
time for which those terms are offered.
You’ll need to
accept the commitment by returning a signed copy to the lender
within five to ten days. Sometimes the underwriter approves the
loan with conditions that you’ll need to meet in order to close
the loan. These will be spelled out in the commitment
letter.
Once the
commitment letter is received, you are assured of the financing
you need to complete the purchase of your home.
A note of comfort
to the waiting applicant.
While the time between submitting
your application and receiving the commitment letter can be
nerve-wracking, keep these important facts in mind.
The lender wants
to make the loan. Underwriters are looking for ways to approve
your loan – not reject it. Providing us with complete and accurate
documentation right from the beginning helps speed the process
along.
 Also, make it easy for us to contact
you. The faster you can answer any questions that may arise, the
more promptly your loan can be processed.
Now that you
understand that the loan process involves many detailed steps, you
can see why it sometimes takes as long as several weeks to receive
an approval.
When we work
together in cooperation, the home loan process can be just one of
the many steps that lead to your enjoyment of the American Dream –
home ownership! | 
