Loan Process

Seven steps to a home. (Step 8: Move in.)

1. Pre-qualification
   Pre-qualification is usually the first step after initial contact is made to the lender. When pre-qualifying a borrower, 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. Wondering about your credit?
2. Application
   The application is actually the beginning of the loan process and usually occurs between days one and five of the loan. The borrower completes a mortgage application with the loan officer and supplies all of the required documentation for processing. Various fees and down payments are discussed at this time and the borrower will receive a Good Faith Estimate and a Truth-In-Lending Statement, which itemizes the rates and associated costs for obtaining the loan.
3. Opening the File
   This occurs between days 3 and 10. At this time the lender orders a property appraisal, title insurance, property survey, and credit reports, mails out requests for verifications, such as employment, bank deposits, rent, and any other documents needed for processing the loan. All information supplied by the borrower is reviewed at this time and a list of items not yet received is compiled.
4. Processing
   Processing occurs between days 5 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 will be required from the borrower. The processor also reviews the appraisal, 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.
5. Underwriting
   Lender underwriting occurs between days 15 and 25. The underwriter is responsible for determining whether the combined package received by the processor is deemed as an acceptable loan. If more information is needed, the loan is "suspended" and the borrower is contacted to supply more documentation.
6. Pre-Closing
   Pre-Closing occurs between days 20 and 30. The file has come out of underwriting and all conditions are being cleared. Once this has been achieved, a closing time is scheduled.
7. Closing
   Closing usually occurs between days 20 and 30 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 title to the property.

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