The home loan process

How the home loan process works and what to expect.

Mortgage financing can be a very stressful, especially if you have never gone through is before. We have been providing loan services for home refinancing and home purchases for many years. Through our experience we have reduced the process to a couple things. Read this to understand how the process for a home loan works.

First we try to obtain 99% of what we will need to complete your transaction up front. There are always things that may be additionally required, but the majority can be handled upon application or your request. What can really add to reducing the amount of work required, is if you have a clear, realistic idea of what your goal for this transaction is. This helps eliminate any wasted steps when completing the refinancing or purchase transaction.

If your goal is not met it is easy to make adjustments early on. Your representative can communicate with you on what is possible or not, and the appropriate documentation can be requested to smoothly handle the process.

The entire process can be broken down to these steps:

Initial Consultation
Gathering documentation
Appraisal
Processing
Underwriting
Closing Escrow
Wiring Funds

Initial Consultation
The initial consultation is where you and your representative from the lender meet or communicate over the telephone about the specifics of your transaction. The most Important thing is to be completely honest. If there is a circumstance that you are aware of, this is the time you want to disclose this. Any material fact concerning obtaining the refinancing or purchase loan needs to be discussed. This information will come up more than likely somewhere during the refinancing process, so may as well give the person working with you and opportunity to address this early on rather than when it could jeopardize your refinancing or purchase loan.

Be perfectly clear about what it is you want, cash back through the refinancing, loan amount, interest rate, fees you are willing to pay. Anything that is important to your family concerning the home refinancing or new home purchase loan. This gives the representative the best opportunity to deliver the exact service your searching for and will aid in not wasting your or your representatives valuable time. Additionally, if something is not possible, it can be address right away and your refinancing or purchase loan can stay on track. TOP

Gathering documentation
Based on the goal you have spelled out to your refinancing or purchase loan representative. He or she will require certain documentation based on the loan criteria. This may include.
Proof of Income Proof of past mortgage history
Account numbers for loans to be paid off
Purchase contracts and addendum's
Proof of insurance
Explanation letters
Signed disclosures regarding the loan you have selected

Gathering and providing as much up front information is key to having a smooth transaction. While the items above may just be a few examples of what will be required. It is important to understand that no two loans are the same, and that information requested is requested by a third party. Be patient and get any information and return to your representative as quickly as possible.
TOP

Appraisal
All home refinancing and home purchase will require a " Uniform Residential Appraisal Report" (URAR). Different loans require different formats of appraisals. In general a standard interior/exterior appraisal is required. The type of appraisal my vary if property is investment home, condominium, or commercial property. Additionally if property will have any type of government refinancing or purchase loan done. Then the appraisal will be of a different nature. Government loans may include FHA or VA. The costs associated for each type of appraisal vary but generally start at 300 for refinancing or purchase loan transactions. The appraisal is paid for at the time of inspection.
TOP

Processing
During your transaction you may be referred to the process or he or she may contact you regarding items needed to complete your refinancing or purchase transaction. The processor is normally an agent of the broker or lender that is completing the refinancing or purchase loan. The duty of the processor is to collect and organize all the documentation required to close your transaction. He or she may be the corresponding link between your representative and the end investor or your loan. The processor will make sure that all requirements of the loan are met and that the time tables are adhered to making the loan process as smooth as possible.
TOP

Underwriting
The term underwriting refers to when the end investor ultimately reviews all details of your transactions and either approves, denies or counter offers your refinancing or purchase transaction. A initial approval may be obtained prior to underwriting process. However the full approval will not be generated by and underwriter until all aspects of the loan have been completed. This includes: Credit, Appraisal, Property, Income, and any conditions that the underwriter deems appropriate for your loan.
TOP

Close of escrow
Close of escrow is the point where you have signed your final loan documentation issued by the end investor, the investor has reviewed the loan documentation and clear any outstanding conditions relating to the closing or (settlement ) of your loan. Once the loan has closed, " Recorded with your state or county recorders office. " this is the point where the transaction is finalized and the transaction is nearly over.
TOP

Wiring instructions
The wiring of funds process can a stressful event for you as well at this point. Your refinancing or purchase transaction has closed. Your eagerly awaiting the keys to your new home, or the funds that are due to you as a result of the loan obtained. There are federal regulations pertaining to the time of day when funds can be transferred to your bank account. What is happening is that when an investor "funds a loan". This means that they have notified the escrow agency of attorney handling the closing of your refinancing or purchase, that they are send money out to either party concerning your loan. There can be a delay of 2 to 3 hours between the when the investor funds your loan and when the escrow agent or attorney receives the funds in their account. Each transaction is process from the investor, through the Federal Reserve Bank, then on to the closing agent. The Federal Reserve Bank has time restrictions for when it will transfer funds along to the closing agent depending on what part of the country you live. In most cases it is 4pm eastern time. It is important to provide your closer with a cancelled check to receive funds. Larger checks that the closing agent could provide you with could be held by your bank for a period of days. Having your funds wired to your bank account can eliminate any delays in getting your money.
TOP