An Overview of the Loan Process

		First Name:* Last Name:* E-Mail:* Phone:* Loan Amount: Loan Purpose: Purchase Refinance Refinance & Cash Out Loan Program: 50 Year Fixed 40 Year Fixed 30 Year Fixed 20 Year Fixed 15 Year Fixed 3/1 ARM 5/1 ARM 7/1 ARM 10/1 ARM Adjustable Interest Only Property Use: Primary Residence Second Home Rental or Investment Property Type: Single Family Condo/Townhouse 2 Units 3 Units 4 Units Other Property Value: Enter Code Shown:* * Required

 What's the difference between "Pre-Qualified " or "Pre-Approved"?

It is common to confuse the terms "pre-qualified" and "pre-approved", and sometimes (mistakenly) use the terms interchangeably.  The pre-qualification process should be your first step in the mortgage process.  "PRE-QUALIFIED" means that a borrower has spoken to a lender on the phone and, based on a brief conversation and maybe a preliminary credit bureau report, the lender renders an opinion defining a range of home values that should comfortably fit the borrower's budget and lifestyle. 

Going through this pre-qualifying process not only helps the borrower understand what real estate properties may be realistically available to them from a financial standpoint, but may also serve as a planning tool to acquire real estate, even if the borrower isn't quite ready to commit to the house-hunting process.   Many times, the Realtor with whom the borrower is working, will even insist that the borrower seek the advice of a mortgage consultant (or lender) prior to looking at homes. 

"PRE-APPROVED" means the borrower has taken the time to submit all, or most, of the required documentation to a lender, that the lender has checked the borrower's credit bureau report, and the lender is reasonably certain that the mortgage can be granted to a borrower, up to a maximum interest rate and up to a certain loan amount.  So, being pre-approved should:

1. Inform you of your maximum affordable home value, and save you from previewing properties outside your price range.
2. Put you in a stronger negotiating position with the seller, because the seller will know your loan is pre-approved, and you are a viable buyer.
3. Help you close quickly, since your loan is pre-approved.

The borrower can actually be "FULLY-APPROVED" for a home purchase, subject to title work, appraisal and homeowners' insurance (and sometimes other items, too).   This means a lender has actually underwritten the loan and committed to the borrower.  A fully-approved loan status is the strongest position in which a borrower can be -- because the seller knows the borrower is willing and able to complete the purchase transaction in a timely manner.

Organize Your Documents

A properly documented loan application makes your loan process go smoothly. This checklist will help you gather your paperwork.  Much of your time necessary to prepare this paperwork can be eliminated, though, if you call us first.  We'll do the preparation of the loan application for you.

1. You can complete and sign the on-line residential loan application (Form 1003), or call us, and we'll email (or fax) to you a personalized version of th application, as well as all of the applicable disclosures.  Remember:  If you make a mistake while filling out the application cross it out, and make a change. Do NOT use whiteout.
2. If you are salaried: provide W-2's for the previous two years and one month of paystubs. If you are self-employed, provide tax returns for the previous two years, including all schedules, and a YTD profit and loss statement. (Note: provide copies of all requested documents. Do not provide original documents.)
3. If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules.
4. To speed up the approval process, provide bank statements for the most recent three months, and recent statements for stock, mutual funds and IRA/401K accounts.
5. If you are requesting a cash out refinance, provide a letter explaining how you will use the refinance proceeds.
6. If applicable, provide a copy of your divorce decree and settlement agreement.
7. If you are NOT a US citizen, provide a copy of your green card (front & back). If you are NOT a permanent resident, we will need a copy of your visa.
8. If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors.
9. If you are applying for a home equity line of credit or loan (second loan), also include your first mortgage note.  (This should be with your closing loan documents.)

Shop Loan Programs and Rates

What loan program is best for your situation?  Lenders offer many different loan options:

1. Think about how long you plan to keep the loan. If you plan to sell your home in a few years, you may want to consider an adjustable rate or balloon loan.  If you plan to keep your home for a longer time, you may want to consider a fixed rate loan.
2. Understand the relationship between rates and points. Points are considered prepaid interest and may be tax deductible.  Each point is equal to 1 percent of the loan. For example 1 point on a $150,000 loan is $1,500.  The more points you pay, the lower your rate.
3. Compare different loan programs. With so many programs to choose from, it's hard to figure out which program is best for you.  Consult an experienced loan officer who can help you find a loan program that best fits your short- and long-term plans.

Obtain Loan Approval

Once your loan application has been received, we will start the loan approval process immediately. This involves verifying your:

• Credit history
• Employment history
• Assets including your bank accounts, stocks, mutual fund and retirement accounts
• Property value
• Based on your specific situation, additional documents or verifications may be required.

To improve your chances of getting a loan approval, please refer to our page of "DO'S and DONT'S WHILE YOUR LOAN IS IN PROCESS".

Closing the Loan

After your loan has met all of the underwriting conditions and has received final approved, a "Closing" will be scheduled, at which time you will be required to sign the final loan documents.  Be prepared to:

• Arrange for a wire transfer, for your down payment and closing costs.  Personal checks are normally NOT accepted, and sometimes there is a hold-up on a cashier's check.
• Close at the title company.  Please bring a picture ID, such as a driver's license, with you.  Review the final loan documents, with the lender and escrow officer.  Make sure that the interest rate and loan terms are what you were promised.   Also, verify the accuracy of the name and address, as well as social security numbers,  on the loan documents.  
• Sometimes, it is not possible for the borrower to attend a physical closing at the title company.   We are able to accommodate "out-of-town" closings; if this is necessary for your transaction, we will give you further information on how this is accomplished.

If your mortgage is a purchase transaction, your loan will normally fund the same day, or possibly the next business day after you have signed the loan documents.  On refinance and home equity loan transactions, federal law mandates that you have three business days to review the documents before your loan transaction can fund.