Mortgage Process

The first place to start in the mortgage process is choosing a loan officer- while gathering your paperwork. Basically, a person will need to prove through income and history that they can and will pay their loan. You can find the information that the loan officer will be looking for by "clicking" the Needs List. Even if you do not have your paperwork in order, you may still fill out a loan application. Remember, that just filling out the loan application does not "bind" you to accepting the loan. Even when prequalifying, the best place to start is the application- followed by a credit report.

After the loan application is completed, the loan officer will offer a few scenarios best suited for your needs. If you have all of your financial statements in line, then the accuracy of the "Good Faith Estimate" is greatly improved. After you choose the best program, the rate is "locked"- (remember, the rate is subject to change within the market' so it is best to lock a good rate as soon as possible.) Another key thing to remember- you cannot lock a rate without a contract on a property. If refinancing, the contract is not a sales contract; but your previous mortgage note. After the rate is locked, you now begin the process.

The paper work is then handed over to a processor- who puts the file in order to "package" to the investor. This process is very time consuming- inspections on the house have to be qualified, homeowner's insurance needs to be arranged, etc. During this process, your paperwork turns into a "book" which may rival War & Peace. This should be considered when locking the rate to determine how long the "lock" will last.

After processing, the loan is sent to the investor. Even if the origination of the loan starts within the investor, the packaging will be handed off to another department for an approval. The investor will then either approve or decline the application. If declined, hopefully, you have chosen a broker strong enough to be able to send the loan application to another alternative. If approved, there are still a few things that need to happen. In the mortgage business, getting an approval- and having funds disbursed are two different stories. A lot of loan officers may boast a high approval rating- ask them where their "funding" ratio stands.

From the approval, the file is "underwritten" and sent to title. This is where buyer and seller meet to sign paperwork. It is not necessary for the buyer to meet the seller- just that they both show up promptly to sign. When the title contract is signed, the approval-application- the book-ALL of it is summarized in a HUD-1 Settlement statement. It will have some variations from the" Good Faith Estimate" because the taxes vary from county to county- and the homeowners insurance may vary, etc. Once the HUD is signed and approved, the investor will then disburse funds. This whole process usually takes about thirty- sixty days. Time may vary- as each individual family provides a unique financial package.

The key to understanding the mortgage process is to understand the law. People for people write the law. The law is therefore subject to change and interpretation. There are specific guidelines that are set to protect the investor, the buyer, and seller of real estate. The laws are never perfect, but are the fairest solution to protect everyone involved. This is why it is essential to choose a good mortgage broker. Through experience, they understand where red tape may hold up a mortgage-and know how to deal with that red tape. The broker earns there living by assuring that your loan funds- not just approved.