Loan Process

 
 
 
 
Pre-Approval
Prequalification is the process of determining your ability to get loan approval even before you decide on the home you want to purchase. The pre-approval is based on your creditworthiness, your income, your debt load and the amount of funds you have available for down payment. Once you have received your pre-approval and have chosen the home you want to purchase, we will verify the information on the application and order an appraisal to verify the value of your property.
 
You can find out now if you are pre-approved for most of our mortgage loan programs simply by completing the application, choosing INSTANT DECISION and paying a $50 fee. If you choose not to proceed with an instant decision, you can complete the application for manual submission and a mortgage loan consultant will review your application and contact you.
 
Application
At loan application, you will need to provide the following information:
  1. Your residence history for the past two years. If you have rented, we may ask you for your landlord’s name, address and phone number.  
     
  2. Your employment history for the past two years. We will need the name, address and phone number for every employer you’ve worked for during the past two years. If you have been unemployed at any time during the past two years, we will need a letter of explanation.  
     
  3. To verify your income, we will need your most recent paystub and your W-2s for the previous two years. If a substantial portion of your income is commission, bonus, interest, dividend or rental income, we may need your tax returns for the previous two years. If you are self-employed, we will need your previous two years tax returns.  
     
  4. To verify your assets, we will need all pages of your most recent bank statements. This includes all checking, savings, IRA, Retirement, 401(k), Stock and Mutual Fund accounts.  
     
  5. For all real estate owned, provide the property address, market value, lender name, loan amount, monthly payment and monthly insurance and tax expenses. If you own rental property, we may ask for a copy of lease agreements.  
     
  6. Be prepared to list all non-liquid assets and non-real estate liabilities.  
     
  7. If you have signed a Sales Contract, we will need a copy of the contract and the earnest money check.  
     
  8. Bring with you a government-issued photo ID such as driver’s license, stated-issued identification or US military ID.  
     
Interest rates and loan fees will be discussed and disclosed to you at this time. You will be given an itemized estimate of your closing costs. You should also be prepared to pay your appraisal fee.
 
 
Processing & Underwriting
At this time, your processor will gather all of the information together so the underwriter can make an informed decision regarding your loan. We will request an appraisal on the subject property. A qualified appraiser will inspect the home and provide the lender with a written market analysis. This analysis includes data about the home, the neighborhood, and current market conditions. The appraiser also uses comparable sales to determine the fair market value of the property. Think of this as approving the property for the loan as well as approving you for the loan.

In approving you, the borrower, the underwriter’s decision will be based on two key factors: your ability and willingness to repay the loan. Your employment and income will be verified to determine your ability to repay the loan. Your proposed total housing expense will be compared to your gross monthly income and then your total monthly debt will be compared to your gross monthly income. Using these calculations we can determine if you can comfortably afford the mortgage loan that you have applied for.

Your credit report is the key factor in determining your willingness to repay the mortgage loan. It is a major component in determining if you will be approved. It is important that you understand your credit history.
 
 
Understanding Your Credit Profile
Your credit report is a snapshot of your credit profile at a specific point in time. It is made up of information reported by your current and previous creditors. A credit report includes the following:
  • information that identifies you, such as name, address and social security number  
     
  • present and previous credit information, including high and current balance and payment amounts  
     
  • a payment history for each trade line, showing payments made on time or late  
     
  • paid and unpaid collection items, including medical  
     
  • public record information such as bankruptcies, judgments and tax liens
      
  • inquiries from other creditors that have recently checked your credit  
     
  • your credit score  
     

Using credit scores allows the lender to quickly and easily assess the level of risk of a borrower. It helps the lender in determining both loan approval and interest rate pricing. Your score is determined by your payment history, the amount you owe, how long you have had credit, new credit being sought and the type of credit that you have. Credit scores are unbiased; race, age, gender, religion, marital status, nationality or occupation are not part of the scoring system. Credit scores range from 350 to 850. Generally, borrowers with credit scores above 660 are considered an acceptable risk. If your credit score is between 620 and 660, your loan may be reviewed more closely to determine other potential risk factors.

If your credit score is lower than you would like for it to be, there are things that you can do to increase your score such as:

  • make all of your payments on time, especially your mortgage payment
      
  • keep the balance on your credit cards as low as possible  
     
  • be conservative in applying for new credit  
     
  • pay off or make payment arrangements for unpaid judgments or collection items
      
  • monitor your credit report for errors and/or fraud  
     

It is recommended that you check your credit report annually. There are three credit reporting repositories that you should contact:

  • TransUnion: PO Box 1000, Chester, PA 19022 (800) 888-4213  
     
  • Equifax: PO Box 740241, Atlanta, GA 30374 (800) 685-1111  
     
  • Experian: PO Box 2002, Allen, TX 75013 (800) 397-3742
      
If you find a mistake on your credit report, contact the appropriate repository with a written explanation and provide supporting documentation. They are required to open an investigation and if a mistake is confirmed, then proper steps will be taken to correct your credit report in a timely manner.
 

 Closing

Once your loan has been approved, a closing date will be set. We will prepare your closing package and forward it to the closing attorney for completion. Your closing will more than likely take place at the attorney’s office. You will need to obtain Homeowner’s Insurance prior to closing and take with you a copy of the policy and a paid receipt. You will also be required to take a check for down payment and closing costs. The attorney’s office will give you the final amount for the check. You will have a good idea of the fees you are expected to pay because you were given a Good Faith Estimate at application. You will review and sign the loan documents and be on your way to home ownership!