Guide to the Home Mortgage Process

Before You Begin: The Initial Pre-Approval

Before you begin to actively preview homes with your buyer broker it is necessary to obtain a pre-approval from a bank. Your buyer broker can provide you with a list of bank representatives that have established a proven track record of successful transactions.

To start the process the mortgage representative at the bank of your choice will gather all the necessary information from you regarding your income and debts and will perform a credit check. Based on your debt to income ratios and credit scores, a determination is made as to how much you can borrow and which programs will be ideal for your specific situation. To support your claims you will be required to provide financial documentation such as your previous two years of tax returns, last four pay stubs and bank statements. Copies of rent checks may be also be required.

It is necessary to determine type and terms of financing in the initial phases of your home search. This process is referred to as a pre-qualification process. A pre-qualification letter will be required with an offer to purchase that clearly outlines terms such as down payment, mortgage amount, and type of financing. This process can take up to several days to complete. When multiple buyers are bidding on the same home a mortgage pre-approval can be the deciding factor in whose offer is accepted.

You've found your Home: The Mortgage Application Process

• Once a suitable property is located and a mutual agreement of price, terms, and closing date is reached a purchase contract will be drawn either by your buyer broker utilizing a standard Board of REALTORS® contract or one will be drawn up by one of the closing attorneys.
• A copy of this contract will be submitted to your mortgage representative to initiate your mortgage application.
• As part of the terms of the sales contract you will agree to obtain financing within a specified time period which is typically 6 weeks. This period may be extended with the seller's permission in the event that the bank requires additional time to obtain mortgage commitment.
• You will be required to supply a list of supporting documentation needed for processing your loan.

Opening Your File

• An appraisal will be ordered by the bank to make sure that your names sales price meets current market values based on comparable properties that have recently sold.
• All of the preliminary documentation you’ve supplied is reviewed at this point and you will be notified of any additional information or supporting documents needed.
• Requests for verification of employment, pay stubs, bank statements, or copies of rent checks are required at this time.

Processing Your Loan

• All documentation is reviewed to ensure that it is complete and accurate.
• Your credit reports are reviewed.
• Your debts and payment histories are verified, any unacceptable late payments or collections for judgments require a written explanation by you.
• The appraisal is reviewed.
• Your loan file is submitted to underwriting.

Mortgage Commitment: The Underwriting Process

• The underwriter is responsible to determine If the loan package meets all of the lender’s criteria; If more Information is needed the loan is put on hold until you supply the necessary information.
• If you are putting down less than 20% your loan is submitted to a private mortgage guaranty insurer who will provide extra insurance to the lender in case of default.

Pre-Closing

• The title insurance is ordered.
• You will be required to obtain homeowners insurance which is typically 12 months paid in advance.
• Any additional approval contingencies are met.
• A closing date is scheduled.

Closing Your Property

• Adjustments will be made for misc. items such as taxes and heating oil etc.
• Your attorney or lender will notify you of the amount that you will be required to bring to closing via a certified or bank check.
• A final walk through is usually scheduled within 24-hours of closing to make sure that the property will be conveyed to you as stated in the sales contract.
• At closing you will have to sign and initial a package of closing documents that will be explained to you in great detail by your attorney.
• You will receive keys to your new home.

If you have any questions, please don't hesitate to call me at 203-903-9488.