Online Mortgage Application Process Leading To Clear To Close

Online Mortgage Application Process Leading To Clear To Close

This BLOG On Online Mortgage Application Process Leading To Clear To Close Was UPDATED On March 13, 2019

The mortgage application process has changed over the years.

  • There was a time where borrowers met mortgage loan officers face to face
  • Borrowers either met their loan officers at the mortgage company or the mortgage loan originator visited their home or office
  • Now everything is done online, including sending out eDisclosures
  • Due to the online mortgage application system, a mortgage loan borrower can deal with any licensed mortgage loan originator from any state
  • Mortgage loan borrowers are not limited to their local mortgage company anymore
  • A borrower from California can deal with a lender in Florida and vice versa
  • The technological systems implemented in the mortgage industry expands the choice of borrowers in choosing a licensed mortgage loan originator anywhere in the country

How Does The Online Mortgage Application Process Work?

Most mortgage companies today have a website where the mortgage loan originator can apply online.

  • These online mortgage application platforms are secured sites where it is fully protected
  • The initial online mortgage application is a 4 page 1003 mortgage application
  • It asks mortgage applicants personal and financial information such as the following:
    • Name
    • Address
    • Phone number
    • Social security number
    • Date of birth
    • Email address
    • Reserves
    • Employment
    • Employment history
    • Bank name and amount
    • Present address
    • Subject property address
    • Asset information
    • Co-borrower information

Disclosures On Online Mortgage Application

  • Disclosures such as the following needs to be disclosed by borrowers:
    • Bankruptcy
    • Foreclosure
    • Short Sale
    • Judgments
    • Party of a lawsuit
    • First time home buyer
    • Oher federally mandated disclosures

Questions Asked On Online Mortgage Application

  • The online mortgage application will also ask the following:
    • The purchase price of the subject property
    • Type of loan program
      • FHA
      • VA
      • USDA
      • Conventional
  • Once the applicant has completed an online mortgage application, a licensed mortgage loan originator will be alerted via email
  • Borrowers will be contacted by a loan officer and go over application prior to running a credit check
  • Once the mortgage application is reviewed by the licensed mortgage loan originator
  • Loan Officer will do the following:
    • Run a credit check
    • Review credit report
    • Go over online mortgage application to verify information stated
    • Collect necessary docs
  • Once the mortgage loan originator deems it that applicant can get approved, the mortgage loan originator will run mortgage file, application, and credit report, through the Automated Underwriting System for an automated approval
  • If a borrower gets an automated approval from either DU or LP automated findings, they are in good shape
  • DU stands for Desktop Underwriter and it is the Fannie Mae version of the automated underwriting system
  • LP is the Loan Prospector and it is the Freddie Mac of the automated underwriting system

How Mortgage Pre-Approvals Are Issued

Everyone issues pre-approval different. All of our pre-approvals at Gustan Cho Associates are full credit approvals issued by our underwriters.

  • They are called TBD Property Underwriting Approvals
  • Once the above tasks is completed, the loan officer submits it to the Loan Officer Assistant
  • LOA then goes further and may order VOE and get VOR as well as other necessary docs
  • Once LOA completes tasks, it is then submitted to processing and mortgage processor is assigned
  • Processor preps the file for an underwriter
  • Underwriter reviews docs and loan package and issues a pre-approval which is also a conditional mortgage approval

Automated Underwriting System

The automated underwriting system is a sophisticated technologically advanced computer system that will analyze a mortgage loan borrower’s mortgage application and analyze the following:

  • Debt to income ratios,
  • Credit
  • Credit scores
  • Credit history
  • Public records such as prior
    • Bankruptcies
    • Foreclosures
    • Deed in lieu of foreclosures
    • Short sales
    • Judgments
    • Tax liens, collections
    • Public records

Automated Versus Manual Underwriting

AUS analyzes all of the information above and renders an automated approval or rejection in a matter of minutes.

  • The automated underwriting system is an online approval system
  • It is like a brain where almost all lenders require automated approval from the automated underwriting system before proceeding to the next level of processing and underwriting the mortgage loan application
  • For those mortgage loan applications that cannot get an automated approval by the automated underwriting system it can potentially  be done as manual underwrites
  • Manual Underwriting Guidelines needs to be met
  • Not all mortgage lenders do manual underwriting
  • Make sure lender can do a manual underwrite

Pre-Approval And Mortgage Approval

The pre-approval will convert to an official residential mortgage approval once your mortgage file is processed and underwritten.

  • As long as whatever borrowers stated on an online mortgage application is correct and can be verified, borrowers should have no problem in getting an official mortgage approval leading to a clear to close and close on their home
  • Many mortgage lenders have overlays
  • Overlays are guidelines above the automated underwriting system’s approval guidelines
  • There are lenders like myself that have relationships with wholesale mortgage lenders with no mortgage lender overlays
  • Borrowers who get an approve eligible per DU or LP FINDINGS can get a mortgage approved with no mortgage lender overlays
  • Automated approval is final approval as long as conditions can be met

Home Buyers who need to qualify for a mortgage with a direct lender with no overlays, please contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

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