An Overview of The Mortgage Process

Purchasing a house is an exciting time for anyone and a major milestone, whether it’s your first time or not. Our homes mean so much more to us than a shelter from the elements. They are our sanctuaries, a place to rejuvenate and relax, and the setting for many of life’s greatest memories. With most homebuyers opting to purchase their home through financing, it is important to understand the mortgage process and the key steps that must be accomplished along the way. Below is a general outline of the process, courtesy of our friends at Prosperity Home Mortgage.

1. Get Pre-Qualified

The first step anyone should take is to get pre-qualified for a loan. Contact your mortgage company of choice to get started. You will be given pre-qualification information and a list of financial documents they will need. Based on the information provided, the company will determine what loan amount you qualify for as well as your loan options.

Once you are pre-qualified you may carry out your home search with confidence, knowing that you have a price range in mind. Additionally, listing agents and their clients (the home sellers) will know that you are a serious buyer when you submit an offer on a property because you come pre-qualified for the loan and have the greatest chance to close a deal.

2. Make An Offer and Complete Your Official Loan Application

Once you find the right house and have your offer accepted, the loan process begins! You will need to sign an official loan application and provide any additional or outstanding documents requested by your lender. Also, this could be the point where you will lock in your interest rate.

After completing the loan application, the mortgage company will order your home’s title work and a home appraisal to make sure the property sale price is acceptable to the mortgage company and there are no issues with the home’s title, including claims. At this point, you should also schedule a home inspection and get quotes for homeowner’s insurance.

3. Loan Underwriting and Processing

After your offer is accepted and you complete your official loan application, a lot happens behind the scenes to get your deal to the finish line. A Loan Underwriter reviews your loan file and issues a commitment to lend, with certain conditions needing to be met. A Loan Processor is given the conditions, which can include employment verifications, IRS transcripts, updated bank statements, and required documentation for gifts or liquidation of assets. Your credit will also be monitored for any new debt, so be sure to listen to any guidelines and advice provided by your lender so you don’t jeopardize the completion of your loan.

During this time, your lending team will be waiting on title, appraisal, and insurance. They may also need additional documentation at this point of the process.

4. Final Loan Approval

In this step, your loan is given final approval. This means the Loan Underwriter has received and reviewed all items required for approval, which includes the home appraisal and final inspection (if applicable), title, and insurance. Be aware that any changes to credit, employment status, and other factors, can still impact your ability to close the transaction. Work with your lender to make sure you are in the clear to close if you have any questions.

5. Closing Disclosure

At this point, you are nearing the finish line. You will receive a closing disclosure, which will list actual settlement costs. A preliminary copy is issued a minimum of 3 days prior to closing so all parties are aware with as much advance notice as possible. You will also receive a figure for closing, which will include your down payment and settlement costs. This amount is payable to the settlement office by cashier’s check or wire transfer and is due at closing.

6. Closing

You will sign final closing disclosures and final loan paperwork. Your transaction is clear to close! This is the most exciting step – your home has closed, congratulations!

7. Loan Servicing Transferred

Most lenders will create batches of loans and sell that full package to other lenders and service providers. You may get a letter in the mail 1-2 months after the close of your loan with an introduction to your new mortgage service provider with detailed contact information.

As with all things, there are deviations from this roadmap. It is intended to be a loose flow to the mortgage process so you can go in with some idea of how you go from house hunting to housewarming. Please ask your Bennion Deville Homes real estate professional if you have any questions about lenders, lending options, or the real estate process itself. We are here to unlock possibilities for your real estate needs.