The home loan process has many steps from start to finish. On this page, you will find information on each step of the process. Knowing what to expect will make the process less stressful.
Pre-qualification occurs before the mortgage loan process actually begins, and is usually the first step after initial contact is made. The lender gathers information about the income and debts of the borrower and makes a financial determination about how much house the borrower may be able to afford. Different mortgage loan programs may lead to different values, depending on whether you are qualified for them, so be sure to get a pre-qualification for each type of program you are suited for.
The application is actually the beginning of the mortgage loan process and usually occurs between days one and five of the mortgage loan. The buyer now referred to as a “borrower”, completes a mortgage application with the mortgage loan officer. Various fees and down payments are discussed at this time and the borrower will receive a Loan Estimate (LE) within three days that itemizes the rates and associated costs for obtaining the mortgage loan.
Processing occurs between days 5 and 20 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.
Lender underwriting occurs between days 21 and 30 or sooner. The underwriter is responsible for determining whether the combined package passed over by the processor is deemed as an acceptable mortgage loan. If more information is needed, the loan is put into “suspense” and the borrower is contacted to supply more documentation.
Pre-Closing occurs between days 25 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 usually occurs between days 25 and 45 of the mortgage loan process (depending upon the designated length of your escrow). 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.