Understanding the Mortgage course of action
Once you find a lender you are comfortable with, you will begin the mortgage course of action by making an application with the lender. Obtaining a mortgage to buy a home is a course of action, not an event, beginning with the application and ending with the closing.
Applications may be taken by loan officers in person, by phone, or by mail. Different lenders have various preferences, although most will require original signatures on applications and disclosures at some point in the time of action.
You will be expected to provide information about your income, assets, and personal information at the time of application, and during the time of action. Lenders will ask you for documentation to prove information such as:
W-2 forms for last 2 years
Paystubs to cover a monthly pay period with YTD information
Contact Information for Landlord or Rental Mgt. Co.
If you are getting a pre-approval, most lenders will only charge a small credit fee to cover the cost of obtaining your credit, typically $50 or less. Once you have a house under contract, in order to move forward with the time of action, your lender will usually collect a fee to pay for the appraisal for your home. The purpose of the appraisal is to prove the value of the home to the lender. This fee will be from $300 to $500, depending on your market. You will be entitled to a copy of this report, and you should request a copy of it electronically (usually in a .pdf format)
It is usually at this point in the mortgage course of action that you will be introduced to the Mortgage Loan Processor, who is responsible for assembling the required documents, verifying them, and sending the loan package in a prescribed order to be underwritten. Processors perform a very basic function in the mortgage course of action. It is important that you provide all the documentation requested to your processor or loan officer, so that they may submit a complete package to be underwritten.
Once all the required documentation is assembled, it will be sent by courier or sometimes faxed to be underwritten. The Underwriter’s job is to review and make a loan decision based on the information and documentation provided and make certain that it is within the underwriting guidelines set up by the lender.
Usually there will be some conditions to be met for a “final” loan approval. It is important to remember the complexity of this course of action and not be frustrated or angry if the processor or loan officer ask you for additional information, sometimes just days before closing is scheduled. Sometimes these requests will seem ridiculous, or asking for information that doesn’t seem pertinent. Keep in mind that the Underwriter is simply trying to do their job, and has checklists they must follow.
Once all the conditions have been received and sent to the Underwriter for review, they will be “cleared.” After all underwriting conditions have been cleared, the file will be considered “Clear to Close.” At this time it will be sent to the closing department, where documents will be generated for your closing. These documents will usually be sent by email to the attorney or closing agent.
Once your closing is scheduled, it is important to be in contact with your lender and the closing agent. They will inform you of any additional documentation that may be required for closing, and inform you of the amount of money you will need to pay at closing. Funds for closing will be wired from the lender to the closing agent directly, and disbursed at closing. Closing sometimes happens in a room with all parties present. You have a right to request that your loan documents be signed in private, due to the personal character of the documents you will be signing. Once these documents are signed and you receive copies, the mortgage course of action is complete, and you are officially a home owner. Congratulations!!!