Steps in the Mortgage Process when You are Buying a Home
The process of getting a mortgage consists of several stages and typically takes anywhere from 30 – 45 days (or more) depending on how prepared you are, what mortgage program you have selected and if it’s a purchase, the closing date may dictate how long the process will take. The steps below may not take place in the exact order. I have listed and some steps may happen simultaneously.
Processing. Once you have provided your lender with a purchase contract, you will begin the processing stage of your transaction. The loan processor works closely with your mortgage originator to prepare your transaction for underwriting. During this stage, title insurance and escrow are ordered. The processor will review and update the application and will request any additional information or documentation from you.
NOTE: If you have any changes to your application during the process, such as changes to your employment, assets or credit, that you contact your Loan Officer immediately.
Initial Disclosures. After you have provided your lender the purchase contract, or have a complete application, you will receive your initial loan documents. The preliminary loan package will include your Intent to Proceed and Loan Estimate (LE) as well as other disclosures.
Appraisal. When buying a home, the appraisal is typically ordered after the home inspection (assuming there is one) has been done and the results are satisfactory. When the lender receives the appraisal, it is reviewed by underwriting and then provided to the borrower.
If the appraisal comes in less then the sales price or expected value of the home, we will review possible options with your Loan Officer. The lender will base the loan to value on the lower of the sales price or appraised value. In the event or loan amount or terms of the mortgage change, you may receive revised disclosures, including an updated Loan Estimate.
The appraisal may also have items that need to be addressed.
If the appraiser calls for items to be repaired or re-inspected on the appraisal, a re-inspection may be required.
Underwriting Approval. Once processing has a complete loan application with supporting income and asset documents, they will submit the loan to underwriting. Underwriters will review the application, supporting documentation and lender guidelines. They will then either issue a “conditional approval or possibly deny or suspend the file. Assuming the loan is approved, their may be “conditions” to the approval that need to be resolved before they can issue a “clear to close”. Examples may include documenting the source of a large deposit, explaining employment history, providing updated pay stubs, or missing pages of a bank statement.
After the initial underwriting approval (conditional approval) is issued, the file is sent back to processing to work on getting the items requested by the underwriter.
Review and re-submission of conditions. The processor and/or mortgage originator will work on obtaining the underwriting conditions. This often means that you, the borrower, will be hearing from the mortgage company with a list of additional items that are needed. This is not unusual… and you’ll probably feel like you’ve been asked for the same thing over and over again. The mortgage process is redundant – there is no way to sugar coat it. The good news is that by this time, you are almost finished!
Once the processor has obtained everything from the underwriters conditional approval list, the file is sent back to underwriting for review. If the documents are accepted the underwriter, final approval will be issued.
Final approval. This means that at the very least, all prior to doc conditions have been met. There may or may not be prior to funding conditions remaining. At this point, loan documents can be prepared.
Docs. After the lender receives the signed Closing Disclosure from all borrowers, they can begin preparing loan documents. Once the loan documents are prepared, they are delivered to the escrow company.