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Prequalification
Prequalification occurs before the loan process actually begins and involves the lender’s review of your basic credit, income, and debt information. In the case of a home purchase, this allows the lender to make an initial assessment as to the maximum sales price you may be able to afford. Prequalification is not a required step when purchasing a home, but it provides you with important information while you are looking at property. It also allows the lender to provide you with a pre-approval letter that can be used when you are ready to make an offer. For a refinance loan, the prequalification process includes an analysis of your projected savings to help you decide whether refinancing is a good idea for you. Application Submitting a loan application officially begins the loan process. You will be asked to provide information about your residential, employment, and credit history, as well as your assets, debts, and other items relevant to obtaining a loan. You may complete your application in person, by phone, or online. If you have previously spoken with a mortgage consultant for pre-qualification, you will simply need to provide some additional information to finish the application. When your application is complete, your mortgage consultant will present the loan options available to you and discuss the fees associated with your loan. You will also be provided with a Good Faith Estimate (GFE) and a Truth-In-Lending Disclosure (TIL), which itemize the rates and estimated costs for obtaining the loan, along with several other disclosures and authorization forms for your signature. Loan Processing Your mortgage consultant works with a processor who prepares the loan package for submission to underwriting. The processor communicates with you regarding the documentation required for your loan, which may include your most recent pay stubs and bank statements, IRS 1099 forms, federal tax returns, asset information, or other documentation required for loan approval. The processor also orders any third-party documentation required for the loan program you have chosen (including appraisal, title report, and flood certification). When all of the documentation has been received and verified, the processor puts together the final loan package and submits it for underwriting. Underwriting The underwriter is responsible for determining whether the application package prepared by the processor meets all of the lender's criteria. If more information is needed, your mortgage consultant or processor will contact you to request the additional documentation. When the underwriter approves the loan, you will receive either final approval or “conditional approval,” meaning that there are certain conditions that must be met prior to closing or funding your loan. The processor will fill any conditions, with your help if necessary, so the loan may receive final approval. Closing When all conditions are cleared and the lender issues final loan approval, our office will schedule your closing with the title company. At the closing you will sign all of the documentation necessary to finalize your loan. At that point the lender then "funds" the loan by issuing a cashier's check, draft, or wire to the title company’s closing agent. The closing agent disburses funds in exchange for the title transfer to the property. This is the point at which you finish the loan process and actually refinance or purchase the property, subject to the lender's loan. |
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