Mortgage Process

There are several steps that will take place during the mortgage process.  Lenders today have become extremely cautious in light of all the instability currently plaguing our financial markets.  Due to the overwhelming requirements and stipulations now put upon home loans, having a good mortgage broker becomes more important than ever before.  Your mortgage broker will serve as your consultant, working with you every step of the way. The mortgage process should not be a painful experience. We will ensure that the time you spend with us will be enjoyable and effortless. 

Every mortgage originator will have some type of in-house mortgage process, which will vary from one company to the other.  The primary objective of any mortgage process is to advance you from application to funding as quickly and as effortless as possible.  Mortgage brokers tend to have a strong awareness of how most people view a mortgage transaction. New applicants applying for a home loan tend to have increased levels of sensitivity mainly because this will be the biggest financial decision you will ever make.  In order to make the process as smooth as possible here are the steps you and your lender should be taking to advance your home loan to funding as quickly as possible:

Step 1: Do your homework:

Most people dive right into a mortgage application without having any real insight into what a mortgage package should look like.  I suggest that you start talking to your family and friends in order to learn what their experiences have been with their own mortgages.  Once you have gained insights from those around you, I suggest that you do a little bit of your own research.  Most of the information you need is accessible online.  Our resource page located at www.onlinemortgagebank.net has made considerable efforts in having all the necessary information readily available at your fingertips.  

Step 2: Call and set up your initial consultation and be ready to provide the information needed for the application:

A face-to-face consultation will be your best opportunity to interact with your mortgage broker.  Because your time is important, a consultation session should be educational and informative so that you can make the best decision for you and your family.  It can be increasingly difficult to provide any recommendations without having ample time allotted to properly review your application.  For this reason, we recommend that you go through your preliminary application right over the phone.  Doing so will assist your mortgage provider in having the information they need before you actually sit down for your one-on-one consultation.  If you are unable to come in directly for a one-on-one due to issues related to your proximity to our office we can easily establish other means to communicate with you.  

Step 3: Your initial consultation:

Your initial consultation with a mortgage originator will be a solid opportunity for you to find out more about the person you have chosen to work with.  Typically, I will begin the meeting by getting to know you better on a personal level, which allows me the opportunity to build the foundation necessary for a long lasting relationship.  Relationships are a two-way commitment, and by including you in my life a friendship can be established.  I want to build up the trust in our relationship right up front and I will work very hard to ensure that you have the faith in me to get the job done right for you.  You will more likely trust someone you like, which will make the overall process smooth for all involved.  

The primary objective for our session is to present you with enough information to meet your level of comfort.  We do not want to overwhelm you by presenting every possible program available out there.  We will give you the information you need to make the right decision for you and your family.  I learned early on that when I try to educate someone on the entire mortgage industry people are frequently overwhelmed.  I am very passionate about mortgage origination and therefore will take the time to educate you on any topics you need.  I believe that you are hiring us to help narrow down your choices to the best two or three options available to you.  We will obviously have a primary recommendation in place to help guide you to what we feel is the best option.  However, ultimately you get to choose what works best for you and as soon as you have made your decision, we will simply print out the loan documents need for you to sign. 

Finally, we will give you an “items needed” list.  The “items needed” gives you a list of items required by the lender to finalize the approval process.  The additional documentation we collect will include items such as: 3 months bank statements, Copy of your drivers license, asset information, W2’S and so on.  I have a detailed list you can go through listed in the resource center at www.onlinemortgagebank.net .

Step 4: Submitting your loan application to processing:  

Submitting your loan package to processing for a preliminary review will be the first step in completing the lenders requirements for loan approval.  Your mortgage provider will need to deliver a signed application and any supporting documentation needed for the loan before it can be reviewed by the processing team.  The processing team will normally consist of a head processor and at least one assistant.  Depending on the number of loan officers working for the mortgage provider additional processors may be required.  A processor will be a valuable asset to you during the loan approval process.  Their primary job is to represent you and your interest only, unlike an underwriter who will only represent the lenders needs.  In order for your processor to effectively do their job you should be as open and as honest as you can.  Rest assured, the processor will only give the underwriter the bare minimum of what the lender might need.  This will ensure that your loan not only gets approved, but will also move through the process as smooth as possible. 

There will be a variety of items needed by the lender, before any type of final loan approval will be issued. Most of the information needed by the lender will be requested and gathered by us shortly after the application is signed. We will list these requirements on the “Items needed list” discussed earlier. However, we may overlook some things, which is where the processor comes into play.  

Our processor will ensure that any missing items are included in the file. They will also be responsible for all third party requirements needed for loan approval such as ordering and submitting the appraisal, title work, verifications of income, residence, and employment, ILC, and other behind-the-scenes documents required for a completed loan package. Once we have a complete loan package in place the processor will submit the file to the lender. 

Step 5: Submitting your loan to the lender for approval:  

The lender will accept an applicant’s loan package as soon as it meets the minimum requirements set by the lender for review.  The lender will put the loan package into an assignment queue, where it will remain until an underwriter is assigned.  Once assigned, the underwriter will begin to work a standardized lender checklist to ensure that any documentation needed by the lender is in the file.  They will also analyze employment, housing, and loan to value ratios to ensure it meets Fannie Mae and Freddie Mac guidelines.  The reason that underwriters scrutinize a file to the extent that they do is because if for any reason the loan package does not meet what the market requires, the loan will not be eligible for sale on the open market.  If the lender has an unsellable loan on the books they will have to hold on to that loan until the home owner either sells or refinances again.  Therefore, underwriters do not like to make mistakes.   Once the underwriter has had the opportunity to review your file and it meets the lenders standardized guidelines they will issue a conditional approval.  If for some reason it does not meet the lenders standardized guidelines a credit denial letter will be sent to you.

Conditional approval simply means that the loan package meets all qualifying guidelines set by the lender.  This is good news for our clients, but it does not mean we have final loan approval.  The underwriter will communicate any additional information needed to the processor so that they can coordinate the additional items needed from you and anyone else required to submit information to the lender.  

Step 6: The communication process:  

The communication process really should take place at every step of the way.  There are several different ways that a mortgage broker will remain in contact with you.  If you are not receiving the communication you need, then it is in your best interest to be proactive.  Don’t be afraid to call your mortgage provider to find out the status of your loan.  Keep in mind the mortgage provider and all entities involved in trying to close your loan works for you, therefore it is within your rights to know exactly what is going on when ever you choose to do so.

Our goal is to ensure that you are contacted at least once a week.  Typically we like to wait until Friday to communicate the activity on your file.  This ensures that we have given you as much detail as we can for that weeks activity on your loan.  The processing team will also be in constant contact with you throughout the loan. Remember; they are responsible for submitting the information needed to our lenders, and to do this successfully they will need to be in contact with you throughout the process.   

In short, the amount of communication needed by any one person can vary.  We will adjust how we communicate information to you based on what your needs are.  In fact most of our clients will not only have the office number but my personal cell number so that they can easily reach me anytime they need to.  

 
Step 7: List of conditions    

Having to generate supporting documentation can be the toughest part in obtaining a home loan.  For this reason most mortgage originators will attempt to get all the needed documentation they can upfront before having it reviewed by an underwriter.  Once the file has been reviewed, the underwriter will issue a “list of conditions” to the mortgage originator’s processing team.  The “list of conditions” is designed to outline the documentation still needed from you in order to get final home loan approval.  Therefore a processor will still be needed in order to coordinate any documentation requests between you and the lender.

The processor will continue to communicate with you until they have satisfied all of the conditions being requested by the underwriter.  Once the conditions have been satisfied the underwriter will issue a loan commitment letter indicating that the loan has met all the necessary criteria for final home loan approval.  Having final home loan approval on your loan means that your loan documents will be sent to the closing department and funds will be set aside on your behalf.  The closing department will then coordinate with the title company to ensure that your final loan documentations are signed and that funds are distributed.    

Step 8: Setting a time for closing:

Once we have final loan approval the processor will speak with you to determine a date and a time that you will be available to close on your loan.   Keep in mind that most people take about 1-2 hours to finish closing on their home loans.  Therefore, it will be important for you to consider how much time you might need when setting up your closing time.    

Step 9: Closing and funding your loan:

This is it--the final phase in the mortgage approval process. Closing will typically take place at a title company, on the day and time that best fits everyone involved in the real estate transaction.  Most realtors and most mortgage originator will use a title representative to help facilitate the closing on you home loan.  This is done so that you can have an impartial representative disclosing the details of your home loan.  Obviously you should be concerned about any risk that might cause you financial harm and having an impartial representative coordinate your transaction will help minimize your exposure to that risk.  If you are placed in a situation where your realtor or your mortgage originator conducts the closing themselves, I would strongly recommend that you to walk away until a third party representative can be assigned. There should be no reason why anyone involved in the transaction should be closing your loan.  

Going through the entire home loan process can be a bit intimidating as it is, and sitting at a closing table while everyone watches you sign is no different.  My advise is to relax, everyone in that room wants you to close, and will be happy to answer your questions as they come up.  Don’t be afraid to read the documents in full, but the title representative will give you a quick overview of each document before you sign.  While reviewing your closing documents you should put together a list of questions you want answered.  Here are a few you should consider:

1. 1.    Do I have a prepament penalty?

1. 2.    Does the total loan amount fall in line with what I expected?

1. 3.    What interest rate shows up on this loan?

1. 4.    What are my loan terms? Do I have a fixed rate or is it adjustable?

1. 5.    Do the Fee’s match up with the original numbers we agreed to?

1. 6.    Am I getting all the credits that were promised to me?

1. 7.    What will my payment be? Does it include Taxes and Insurance?

1. 8.    Did the title company collect for my taxes and insurance?

1. 9.    When is my first payment?

10.  If I have an adjustable rate mortgage when will my rate begin to adjust? How much will the interest rate adjust to when it begins to adjust?  

If there are any surprises at closing your mortgage originator has not done their job.