An Overview of the Loan Process
Getting qualified before you apply for a loan can help you understand how much you can borrow.
When buying a house, you may get pre-qualified or pre-approved. A pre-qualification is based on what you state in your loan application, and a pre-approval involves verifying what was stated in the loan application against source documents which includes verification of your income, assets and liabilities. Both of types of approvals require a review of your credit worthiness. Sellers prefer to sell to buyers that are pre-approved. A pre-approved borrower is
- in a stronger position when negotiating with the seller, because the seller knows that the buyer has the ability to close,
- and you will be able to close faster than someone who is not pre-approved, which can be another negotiating tool for your Realtor.
Select a Loan Program and Shop Rates
To select a loan you will need to:
- Think about how long you plan to keep the loan. If you plan to sell the house in a few years you may want to consider an adjustable or balloon loan. On the other hand, if you plan to keep the house for a longer time, you may want to look at fixed loans (more advice on selecting a loan program).
- Understand the relationship between rates and points. Points are considered to be prepaid interest and are tax deductible. Each point is equal to one percent of the loan. So for example 1 point on a $150,000 loan is $1,500. The more points you pay, the lower the rate you will get.
- Compare different programs. Shopping for a loan can be difficult. With so many programs to choose from, each of which has different rates, points and fees, it's hard to figure out which program is best for you. That's where an experienced loan officer can help you make a decision that's best for you.
Once your loan application has been received we will start the loan approval process immediately. This involves verifying your:
- Credit history
- Employment history
- Assets including your bank accounts, stocks, mutual fund and retirement accounts
- Property value
Based on your specific situation, additional documents or verifications may be required. To improve your chances of getting a loan approval:
- Fill out the loan application completely.
- Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
- Do not make any major purchases. Do not buy a car, furniture or another house till your loan is closed. Anything that causes your debts to increase might have an adverse affect on your current application.
- Do not move money into your bank accounts unless it can be traced. If you are receiving money from friends, family or other relatives, please contact us.
- Do not go out of town around the closing date. If you do plan to be out of town when your loan is expected to close, you may sign a power of attorney, to authorize another individual to sign on your behalf.
After your loan is approved, you will be required to sign the final loan documents. This will normally take place in front of a notary public. Be prepared to:
- Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally not accepted.
- Review the final loan documents. Make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate.
- Sign the loan documents.
Your loan will normally close shortly after you have signed the loan documents. On refinance and home equity loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can close.
Our Mortgage Loan Officers Always Put the Customer First, Taking You Forward