The lending institution will assign a loan officer, or borrower will choose one. The loan officer will be the borrower's guide through the mortgage process, from application to the final funding of the loan. The officer will answer borrower questions, keep borrower advised of the loan status, and help organize any final information require by the lender. Expect the mortgage process to take about four to six weeks from start to finish. Listed below are the four steps for defining the mortgage process.
The loan officer will lead borrower through the preliminary qualification questions to determine borrowers loan needs and recommend a loan program that will best suit their purposes. Housing to income and total debt income ratios are calculated. Very comprehensive information is collected from the borrower. They are asked to provide documentation such as bank statements, pay stubs, W-2's, etc. They will sign authorizations and discolsures. Borrower will also recieve a Good Faith Estimate of Closing Costs for transaction, and a Truth-in-Lending disclosure that provides the APR ( cost of the mortgage as an annual rate ) and estimated payments. They will also recieve a settlement booklet. The settlement booklet explains in great detail the fees involved in a mortgage loan.
The loan file then goes to a loan processor who will make sure all the information provided at application is accurate, complete, and meets certain marketing requirements. The loan processor orders credit reports, appraisals, and orders verifications for any missing information. When the file is complete, the processor forwards it to underwriting.
The underwriting process determines whether or not the loan will be approved. An underwriter reviews all the documents for completeness, accuracy, and legibility. The loan file is analyzed for Collateral ( property value and physical condition ), Capacity ( ability to repay the loan ), and Capital ( assets available for down payment and closing costs ). After the underwriter reviews these factors, he or she will make the decision to approve, approve with conditions, or deny the loan request. If the loan is approved, the loan package is signed, dated, and sent off for closing. Borrower receives either a commitment letter ( confirmation of loan approval ), or a written notice of denial.
In the final step of obtaining a mortgage, closing documents are prepared for the final transaction, signatures and recording. At this point, the lender should have a title commitment, survey, and termite inspection. The mortgage is made official and the title of the property passes to the buyer. Borrower is now the legal owner of the property and has a legal obligation to repay the mortgage debt.