Mortgages > Purchase
Mortgage Process and the Loan Officer
The mortgage process can be ugly if you are not well prepared. My first suggestion before you begin the mortgage process is do plenty of homework. Throughout the mortgage process you can get caught up in all the tedious paperwork, time to make the deal happen, and aggravation with someone along the way. Relax…..the mortgage process can be very simple when laid out in steps
Step by Step - Mortgage Process
1) The first step of the mortgage process is choosing a mortgage professional. Sometimes called, “mortgage broker”, “mortgage lender”, “loan officer”, “Sr. Loan officer”, or “Loan Consultant”. What ever their title they should be able to perform your needs throughout the entire mortgage process. Choosing the right mortgage loan officer could make or break a deal, save you lots of money, save a lot of time / aggravation, and consol your anxiety during the mortgage process. Consider online or offline mortgage consultants. Most of the times you will notice lower rates by online mortgage companies than local banks. Banks require a higher premium to pay for overhead that online mortgage companies don’t have. If you are skeptical of online mortgage companies – don’t be. There are many reputable online mortgage companies that have done the mortgage process many times. If you are still worried about choosing an online mortgage company than choose a local online mortgage company. Recently banks have been very competitive to keep up with the online mortgage companies, so make sure you do your comparison shopping.
2) The second step in the mortgage process is getting pre-qualified or pre-approved. Already in the first step of the mortgage process there’s a hang-up in the vocabulary. There’s a difference between the two and the difference is not always known to people who have been in the mortgage process for years. Some real estate agents ask for a pre-approval letter before even showing you houses, but make sure you give them what they ask for. There’s a clear difference between the two and the basic difference is at what step you are in the process determines what type of approval or qualification letter you get. In the beginning stages of the mortgage process a loan officer can give you a “pre-qualification” letter based on the minimal information he/she has on you (things like credit, income, debt-to-income ratios, loan-to-value ratios are some). Typically only a mortgage underwriter can give you a “pre-approval” letter that they receive from the lender whom the mortgage will come from. Ultimately you will not have a “real” “pre-approval or approval” until 20-30 days after the mortgage process begins.
3) Now that you have given the mortgage company all the information they need it’s time for them to do their work (hopefully you have decided on terms of the mortgage). They should be well into the mortgage process now. Some loan officers process their own loans and some hand the file off to mortgage processors. There are some advantages to getting a loan officer that does both because he/she can anticipate problems down the road and pre warn of those issues because of their dual skill.
4) The processing step of the mortgage process: In this process the mortgage company should be handling pulling credit (if not done so yet), ordering an appraisal, ordering title, receiving all pertinent documents, and submitting the file electronically to a secondary lender like Fannie Mae or Freddie Mac. Some handle the loan in house (meaning they are the mortgagor), and some will keep it in-house and portfolio the loan. The mortgage company should be submitting the loan file to whom they think you have the best chance of getting approved and getting you the best rate. Some mortgage companies have 20-30 choice lenders to place the loan with.
5) After the processing mortgage process the mortgage loan officer will often be handing your loan to an underwriter in-house or shipped to an outside lender. Here’s the critical step of the whole process and usually doesn’t take place till right before you wan to close your loan. In this step of the mortgage process you are looking for your “real approval” from the lender. An underwriter does many calculations, audits and review of the file. There is a laundry list of items to make your loan approved with a lender. An underwriter is usually checking all the work done up to this point to make it compliant with the lenders guidelines to make your loan acceptable.
6) Once everything in the underwriting process of the mortgage process is done and you received a “clear to close” from the underwriter you will soon be going to closing. This is where everything comes together (hopefully smoothly). Within at least 24 hours you should have final numbers to close the loan. In this part of the mortgage process you might have to bring a bank check with you for the amount due at closing, because many offices will not accept a personal check for the closing. Sometimes if you don’t have the exact amount, the closing office may let the remaining balance (within a hundred dollars) to be paid with a personal check. Don’t forget if you are purchasing a home during this mortgage process that you do a final walk through on the home to inspect for any surprising issues inside or on the outside of the home. Loan documents in some states can be done with a Notary Public or with an attorney. Be prepared to sign a lot of paperwork, sometimes hundreds of pages thick to be exact. Make sure you know what you are signing and question anything that doesn’t look right, usually changes can be made to the documents in pen or have to be “redrawn” again, but none the less it sometimes can be done on the fly.
7) The mortgage process isn’t over yet. After you shake hands to the people you have purchased the house from or refinanced your home you have to worry about all the documents being finalized. The company who closed the loan should be taking care of paying all parties associated with the entire mortgage process, but sometimes mistakes happen or lenders move to quick for their own good. With mortgage being purchased many times before they mature the closing company could sent the payoff to the wrong place. Just make sure within 30 days after closing that it was indeed paid off if. This may also hold true if you are paying off debts for a refinance, make sure the debts get paid off.
8) Hopefully with a smooth mortgage process and quality people involved there should not be any problems from here on out.
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The tips on this website should be considered food for thought only. Lendingtips.com is a clearinghouse of ideas, not a professional adviser. Before any important decision, please consult the appropriate professionals (lawyer, accountant, real estate agency, broker etc.).
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