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Pre-qualification occurs before the loan process actually begins. The lender gathers information about your income and debts, and makes a financial determination about how much house you may be able to afford.
It's a good idea to know how expensive a home you can afford before you start shopping for one! If you are refinancing the loan on your existing home, then the pre-qualification process should help you decide whether refinancing is a good idea for you.
The application is the beginning of the loan process and either occurs after you have found a property you want to buy or have determined that you wish to refinance the loan on your existing home. You complete a mortgage application for a particular loan program and, supply all of the required documentation for processing. Various fees and down payment options are discussed at this time. The loan officer will deliver a Loan Estimate (LE) within three days that itemize the rates and estimated costs for obtaining the loan.
We will submit the application package to an automated underwriting system (AUS) that will provide us with the necessary documentation needed for loan approval. In some cases, the we may also manually underwrite an application package.
Our processing team reviews the credit reports and documentation to verify your employment, debts, and payment histories. If there are unacceptable late payments, collections, judgments, etc., the processor requests a written explanation from you. The processor also reviews the appraisal (if applicable) and survey and checks for property issues that may affect final loan approval. The processor's job is to put together an entire application package for the mortgage underwriter.
The underwriter is responsible for determining whether the application package prepared by the processor meets the loan program's criteria. If more information is needed, the loan is put into "suspense" and you will be contacted to supply more documentation.
If the underwriter approves the loan, we issue a conditional commitment to lend, order title insurance, and work with you to clear all conditions and then schedule a closing time. Conditions to the loan commitment may include issues with credit, income, or the property that may arise during the processing and underwriting process.
The closing will occur after all conditions are cleared and the clear-to-close (CTC) is issued. At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the closing agent, who disburses funds, in exchange for the title transfer to the property. This is the point at which you finish the loan process and actually refinance or buy the house, subject to the lender's loan. Closings occur at different places in different states. For instance, some states require that the closing take place at a closing attorney's office, while others use a title or escrow company. You may be able to close at your home; also known as a remote closing. Please contact your loan officer to learn more.
The flow chart below explains the homebuying process from start to finish. While no two transactions are the same, the steps below are what occurs with a typical home purchase.