THE “EASY” PART IS AT THE START
The world is beautiful at this point with visions of homeownership & white picket fences on the horizon. This chapter of our love story (sorry – loan process) begins with a phone call to a loan officer who comes highly recommended by someone you trust and respect. The loan officer will take a loan application and give you a pre-qualification letter based on income & credit history. “Wow” you think “that was easy”.
PRE-APPROVAL LETTER (Ok, so what’s the difference)?
You must supply documentation to support the information you put on the application. Stop here and reread previous sentence. Seriously, reread the first sentence. This is where a good loan officer comes in handy, but I’ll get back to that. The lender will ask for copies of pay checks, tax returns with W-2’s and bank statements to verify the information. After the documentation is verified the lender will issue a pre-approval for the mortgage loan.
You’re Turn. Find the right House. Get a good price. Make sure your loan officer gets the executed contract immediately.
Here’s a mantra worth remembering while you are getting a loan:
“Mindset will be your saving sanity.”
No one knows more about your finances then you do, so just know you are going to have to take a very active part in helping your loan officer with the information & documentation they need to make it happen. Believe me, that state of mind will serve you well!
WHY A LOAN TAKE SO LONG (The devil is in the details).
There was a country song out a few years ago where the singer belts out the battle cry ”when you’re going through hell…keep on moving … face that fire walk right through it, you might get out before the devil even knows your there.” Well in the world of loans, he not only knows you ARE there but he will practically want a DNA sample before giving you a loan. Which, come to think of it, might be an easier alternative. They are going to want details, details and more details.
The lender will receive the contract and begin the verification process. They will verify employment, past mortgages, rental income, investment income, income, etc…
HERE’S WHY A LOAN TAKES SO LONG:
Getting verification involves many entities getting back with the loan officer so that that loan officer can package up all documentation for the applicant before submitting to underwriting. Remember when I said you want a good loan officer – that is why. This is when an experienced loan officer will be thinking critically and anticipating any possible problems and dealing with them
on the front end. You must TRY to appreciate this even though it will likely get on your nerves. I can almost guarantee you this is where you might start feeling a little frustrated and wandering if it’s all a sign. Expect that there will be pain and day’s you want to quit and go back to renting. My advice – push past your feelings and just keep going….
Once this is excruciating process is complete, one of the final phases is an appraisal will be ordered by the lender.
THE APPRAISAL: The house is now up for scrutiny, so eyes are off you for the time being and you can take a few days to breathe. Appraisals usually take about a week from the day the appraiser visits the home. Once the appraisal is in the file goes into final underwriting.
ALMOST PURSUADED, BUT NOT QUITE…..
Sometimes at this “final underwriting” stage the underwriter will have certain conditions for the loan to be cleared or it will be declined. If this happens to you it’s perfectly normal to experience numbness of limbs, shortness of breath and a host of other heart attack symptom… just breathe easy and have faith that most of the time these things work out. Stay focused. It’s not the end of the world. The loan officer may be asked to obtain further verification from the buyer or some other entity. Help them, respond to their emails, follow up with your loan officer, love your loan officer, bake them cookies, whatever you do make sure that you get them what they need as quick as possible. Now is no time for retreat. Now is the time to quarterback. Just roll with it, bull dog it & know that you are almost to the finish line.
OUT OF UNDERWRITING AND ONWARD TO CLOSING
Once the file goes out of underwriting, it goes to the lenders attorneys, so that the loan documents can be prepared. You can rest a little easier now. The file is sent to the title company to draw up the Settlement Statement. The Settlement Statement is then sent back to the lender for approval. Once that final approval is in place a closing can happen. You’re done. Your big day has arrived and you go to the title company. You will likely be reminded by the escrow officer to bring your driver’s license and a cashiers check for an amount they will give you. You can’t believe this is finally happening. The moment you’ve been waiting for.
I like to call THIS MOMENTOUS OCCASION a “signing ceremony” where we all gather to witness the “miracle” of yet another closing and the beginning of another chapter.