There is a method to finding and buying the perfect home. The exciting part, when you go on your shopping journey, happens between the pre-approval and the moment your offer on the ideal home is accepted. After that, the fun is in the numbers and the process, which your lender and real estate professional will likely help you navigate.
Mortgage Loan Application
Because you've already been pre-approved, once your offer is accepted we'll only be a few steps away from submitting your application. You'll be provided with a loan estimate and initial disclosures to review, and your loan officer may request a few updated income and asset documents. Once you've signed your disclosures and provided the last few documents, you're loan officer will submit your application for underwriting review and you'll be one step closer.
This can often be the most critical point in the mortgage process. The underwriter will examine everything about your loan, and then ensure it meets the requirements and guidelines before it’s approved or rejected.
They will review your credit history, debt-to-income ratio, and your entire financial outlook, including your capacity to pay the loan back and the value of the property being purchased.
Sometimes a conditional approval is given. These are usually based on discrepancies between the application and what was compiled by processing.
Your purchase agreement and loan application will now go the loan processor. That person will collect all the documents about you, your credit, and the property to ensure everything is in order. This includes verifying your income, employment, and ordering a home appraisal to ensure the value of the home reflects the amount you intend to pay for the property.
Quite often, the underwriter will ask for more information from you. The faster you deliver that information or documents, the sooner your mortgage will be ready to go to underwriting.
Approval and Closing
Once everything is approved, the loan moves to closing. Prior to closing, your lender will likely need proof of homeowners insurance to close on the loan. Making sure you have adequate coverage is a crucial part of starting your home ownership journey off on the right foot. Once your lender has gathered all your documentation, it’s then sent to an escrow or title company to prepare for closing. You’ll then receive a Closing Disclosure from your lender, which is a five-page document that gives you a final chance to review your mortgage loan, including your monthly payments, fees, closing costs, and loan terms.
Finally, the title company will schedule a time for you to come in and sign all of the loan documents. In some states, you could be signing the documents with the sellers. Other people who might be at your signing including the escrow officer, closing agent, the seller’s real estate agent, as well as your realtor.
First Tech tip: the U.S. Department of Housing and Urban Development has a list of qualified housing counseling agencies that can help you understand and navigate the home buying process. Learn more at hud.gov or call 800.569.4287.
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