How the Mortgage Loan Process Works
There is little question that getting a mortgage may feel somewhat complicated, and you may not be sure were to begin. The mortgage process is more difficult than it was a few years ago, but Ginger Sullivan will guide you closely through your mortgage process -- from pre-qualifying through the closing -- so that you can concentrate on what is most important to you: Preparing to purchase your new home or, if refinancing, restructuring your cash flow to maximize the benefit of your refinance.
Our intention is to "go at your speed" and your comfort level. We don't want you to rush into a transaction before you're ready, or you feel that you don't quite understand. We encourage you to ask us questions along the way so that every step forward is an "EASY next step".
Getting a mortgage loan involves four major milestones:
Step #1: Decide how much you can afford
A couple of factors determine this amount:
1) How much of a monthly payment can you afford (or do you feel you want to afford)?
2) What is the maximum you can borrow from a lender, given your income and credit history?
You may use the calculators on our website to determine your monthly payment amount, or let us guide you to the right loan amount and best program for you once you answer a few of our questions. Based upon standard lender guidelines, we'll get you a good idea of what kind of terms and loan program you can expect to benefit from most.
Step #2: Complete a pre-qualification or pre-approval
This is where the process really begins, and Ginger Sullivan can really guide you as to how you can save time AND money. We'll discuss information, such as your employment, asset, and residence history. We will next pull get your credit report and score (with your permission, of course). After we've finished reviewing the information you've provided thus far, we can provide you and your Realtor with a pre-qualification.
When you are ready to make an purchase offer, we will provide your Realtor with a pre-qualification letter ("pre-qual"), specific to the property, rather than stating the maximum amount of loan for which you qualify. The pre-qual letter is a useful tool when you make your offer to purchase. It gives you buying clout -- because it demonstrates to a potential seller that you have made the commitment to seek advice from your lender and taken the time to prove your ability to purchase the home. In the meantime, while you're shopping for a new house with your real estate agent, we'll continue our process of shopping lenders to find the best rates and program for you.
If you have the time to complete your loan application prior to finding a new home, a pre-approval letter demonstrates even more: That you've submitted all (or most of) your paperwork to the lender, so the remaining items for lender approval are basically the following: (1) The fully-executed purchase agreement; (2) Title work and homeowners' insurance; and (3) The appraisal.
Step #3: Lender Approval
Once your loan application paperwork has been submitted to the lender, subject to appraisal, it takes usually 3 - 5 business days, depending upon the complexities of your loan application, to receive initial lender approval. For instance, a self-employed borrower or a borrower with rental properties, will necessarily receive more scrutiny of their tax returns than a W-2 employee. As well, when the lender examines the title report, additional questions may arise. The initial lender approval may also request additional conditions be met or further clarifications made.
We, at The Mortgage Place, try to anticipate questions from the lender's underwriting staff in order to avoid unnecessary delays in the approval process. Once we receive an initial loan approval, we'll order your appraisal from the lender's preferred AMC ("Appraisal Management Company"). The appraisal is usually submitted by the appraiser to the AMC and the lender within 5 - 7 days after the appraisal inspection has taken place. Then, the lender will review the appraisal and approve it, or may request adjustments and/or additional commentary from the appraiser.
Step #4: Closing and Funding
If you are purchasing a new home, the seller and the selling agent will usually designate a title company to handling the "funding" and closing of your transaction. If you are refinancing, you will have the opportunity to choose your favorite title company and escrow officer, if you so desire.
Regardless of whether you are purchasing or refinancing, we'll work with the title company to make sure that your closing goes smoothly, and is timely for your transaction. You'll probably sign all of your closing documents at the title company's office, but if you are out of town for any reason, your closing paperwork can be FedEx'd to you. If your closing is done "remotely", there will be certain paperwork for which you'll need to have a notary, acceptable to the title company.
Most of the paperwork you sign at closing will be similar to disclosures previously provided to you by Ginger Sullivan and Anasazi Mortgage. The lender's Closing Disclosure and title's ALTA Settlement Statement will be the first documents to be addressed. The ALTA Settlement Statement is the reconciliation of the purchase price (or payoff of the current mortgage, if your transaction is a refinance), the loan amount, and the closing costs. The ALTA settlement statement and the lender's Closing Disclosure must match final dollars needed for closing, including closing costs, but the lender's and title's final disclosure statements are in different formats. The title officer and Ginger will be available to answer any questions you may have on the closing documentation.
Have more questions about the loan process? Call Ginger Sullivan
at 505-995-8888. We're most happy to help.