One of the best things you can do is keep the lines of communication open throughout the loan process and follow through on any requests. This will help keep things moving along, so you can close as quickly as possible. Here’s what you can expect during this process.
STEP 1: Loan Application: Complete the application online.
The more prepared you are for the loan process, the better. A complete application with all the requested documents submitted will allow us to get you preapproved more quickly. It will also help when it comes time to prepare your loan file for the underwriter. After you submit the application, you’ll receive a list of the documents you need to upload to your account. You will need the following documents and information on hand:
Income Information and Documentation
Information needed for all borrowers listed on application
- W-2 forms (two years’ worth)
- Copies of two most recent paystubs (last 30 days)
- Self-employment requires year-to-date profit and loss statement (two years’ worth), Form 1099s used for income reporting and taxes. Must be self-employed for two full years.
- Alimony and Child Support
- Real estate income documentation includes rental income, address, lease, and current market value of rental property if using this to quality for a mortgage
- Most recent 2 months’ bank statements (60 days) complete statement/all pages.
- This includes any source of funds you’re using as assets for this loan (e.g., savings, checking, money market, mutual funds, stocks, bonds, retirement, gifts, trust, net equity)
- List any property you own free and clear, and the taxes and insurance associated with this property.
Your credit report will provide most of the information needed about your debt. Share any debt that isn’t likely to be on your credit report.
- A loan from your employer that may show up on your pay stub.
- Personal loans or any documented outside loans
- Any kind of loan that has a lien against the property
- If you currently have a mortgage, share the most recent mortgage statement
Other Records and Information:
- Renters: If your credit is below 640, you may need to show payments for the last 12 months, contact information for landlord for the past two years
- Divorce: Be prepared to share any documentation relating to child support and alimony payments. This includes ALL pages of divorce decree. If you don’t have the divorce decree in PDF file, you can get it from your attorney.
- Bankruptcy and foreclosure: ALL pages of bankruptcy or foreclosure documents, even the blank pages.
- Copy of valid ID
- Social Security Number
STEP 2: Let your mortgage broker know you are under contract as soon as the seller signs.
Send the fully executed contract with buyer and seller signatures to your mortgage broker immediately. Most people want to close within 30 days, so get the ball rolling and get the contract to us as soon as you have it.
Let them know where the escrow money comes from. This must be documented. The best and easiest way to document your earnest money payment is to wire the money directly from the same account you will use to source your down payment and closing costs. It’s worth the extra fee to wire the money. If the earnest money is a gift from a family member, there must be a paper trail from the family member’s account to yours and a gift letter.
STEP 3: Your loan processor prepares your loan file for the underwriter
The loan officer requests any missing documents: Make sure you respond quickly to any document requests or questions. Common documents needed for underwriting and the loan process:
The loan processor verifies assets, income, and employment and checks for compliance and eligibility issues so the process is smooth and efficient. An appraisal is done to determine home value.
Be patient with this process. The loan processor must make sure all your documents are current. Even though you submitted the documents when you applied for the loan, you may have to submit your most recent pay stub, or bank statement because it’s been more than 30 days since you applied. You can help the process by knowing how to access your bank statements and paystubs and having them readily available for your loan processor.
STEP 4: Loan is submitted to underwriter
Underwriting is the mortgage lender’s process for assessing the risk of lending money to you. The underwriter works for the mortgage lender, not the mortgage broker. This review includes an examination of the appraisal, your credit report, and any additional documentation that is relevant to the loan. The underwriter reviews all the documentation to determine if you qualify for a mortgage based on the specific guidelines for your loan program: USDA, FHA, conventional, and VA. They all have their own requirements.
Conditional Approval: Sometimes in the loan process, there are few more documents, verifications, or updated appraisal or reports needed to grant final approval, so conditional approval is granted to a borrower. This means there are criteria that must still be met. Once those conditions are met, the file goes back to the underwriter.
Hopefully the documents you’ve supplied will be enough to clear the loan, however, many times the documents you supply will create an additional condition. It’s important to understand that the list may change or grow. This is a very specific process to you and your finances because no two loans are ever the same.
STEP 5: Loan is Clear to Close
This means the underwriter has signed-off on all the documents and given a final approval. This allows your mortgage team to move forward with the loan. At this point the lender and title company will finalize the closing disclosure. The title company should email you the wiring information along with the final figure to wire.
Clear to close timeline: Closing date and time should have been pre-set a week or so in advance. During this time make sure you pay attention to your emails. You may receive a request for a document or information. The closing date could be held up if you don’t respond in a timely manner. If you get a request four days before the closing, respond immediately. Just because you respond 24 hours before the closing, doesn’t mean it will get processed in time for the closing.
STEP 6: Closing
The title company goes over all documents and numbers. You sign on the dotted line, or several dotted lines, and receive the keys to your new home.
Important: There is a first mortgage payment coupon in your closing package, and you will also be notified by mail and email about where to make your payment. It is also important to put your closing package in a safe place for any future use (like a refinance).