Steps In Mortgage Application Process Leading To Closing

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss and cover the steps in mortgage application process leading to closing. Understanding the steps in mortgage application process can seem overwhelming to those who are not familiar with the mortgage industry and the mortgage loan process. Often times borrowers enter into the steps in mortgage application process without ever knowing what steps or stages there are in the mortgage process of purchasing a home. In this article, we will explore the mortgage application process step of the mortgage process and outline steps in mortgage process borrowers should take to ensure a smooth, successful overall mortgage process.

Applying For A Mortgage Is The First Step In Mortgage Process

When applying for a mortgage, there are multiple different options for potential borrowers. Here are the preliminary steps in applying for a mortgage loan and getting qualified for a home loan:

  • Many borrowers first start with choosing a mortgage lender
  • It is important for borrowers to have a general idea of credit in order to prevent applying with a lender who has mortgage lender overlays that will not allow the applicant to be qualified
  • Mortgage lender overlays are additional mortgage lending requirements that are implemented by each individual mortgage lender that surpass the minimum mortgage lending guidelines by the particular mortgage loan program
  • For example, FHA requires a minimum of a 580 FICO credit score for a home buyer to qualify for a 3.5% down payment home purchase loan
  • However, most mortgage lenders will not accept a credit score of under 640 FICO credit score even though FHA’s minimum credit score requirement is 580 FICO credit score
  • This is called an FHA mortgage lender overlay on credit scores

This is totally legal where a lender does not have to accept the minimum FHA requirements and can set their own lending standards.

Steps In Mortgage Application Process

Prior to applying for a mortgage, borrowers are urged to make sure they have documents that will be required to be submitted. Here are the documents required to get pre-approved. These documents include bank statements, tax returns, paycheck stubs, and proper identity verification documents. Now that you have all of your required documentation and you have selected your lender, it’s time to apply! During the application, you will be required to provide income and asset information, expense information, and consent to a credit check. You will submit to your mortgage loan officer all of the required documentation listed above and then your loan officer will begin to qualify you using Desktop Underwriter (DU) or Loan Prospector (LP).

Initial Steps In Mortgage Application Process Is Getting Automated Underwriting System Approval

DU and LP is the Automated Underwriting System or often referred to as AUS. DU is the Fannie Mae version of the AUS and LP is the Freddie Mac version of the AUS. Do not be alarmed if you are asked to follow up questions or are requested to provide additional documentation based on items found on the credit report. These requests are to ensure that all aspects have been reviewed and that your pre-approval is a solid approval. This is the work of a good, detailed loan officer. One of the main reasons for delays in the mortgage process is because borrowers turn in incomplete documents. Make sure all documents are complete, including blank pages.

Steps In Mortgage Application Process: The Importance Of The Pre-Approval Letter

What are the steps in the mortgage application process?

The pre-approval stage is the most important part of the whole mortgage application process. The main reason for last-minute mortgage denials is that the mortgage loan originator did not properly qualify the borrower. Unfortunately, there are still mortgage loan officers who just take the word of the borrower when qualifying income. They will just look at the borrower’s credit scores to see if they meet the minimum credit score requirements. They will not look at the overall credit history from the credit report to make sure that there are no late payments in the past 12 months, government loans that are in collections, important dates of bankruptcy and foreclosure, and other important data that a mortgage underwriter may catch. It is better for a loan officer to take his or her time on making sure that there are no hiccups and deal with it in the early stages than to push a file through processing and underwriting and end up with a mortgage denial. There is no reason why a pre-approved borrower cannot close if properly pre-approved

Steps In Mortgage Application Process From Pre-Approval To Executed Contract

Alex Carlucci is an associate contributing editor of Gustan Cho Associates. Alex Carlucci is the Author of Steps In Mortgage Application Process. Alex Carlucci is also a senior vice president of Gustan Cho Associates and a licensed mortgage loan originator. Alex and his team at Gustan Cho Associates Mortgage Group are expert in all areas of mortgage lending. Gustan Cho Associates is nationally known for his no lender overlays on FHA, VA, USDA, and Conventional loans. Alex Carlucci got his federal and state mortgage loan originator’s license so he can pursue his passion of helping hard-working Americans realize their dream of homeownership a reality. Alex’s specialty in the mortgage business is originating and funding mortgage loans with no lender overlays.

Qualifying For a Mortgage With Bad Credit

Majority of lenders have overlays. Lender creates major roadblocks for borrowers who had prior credit and income issues. Gustan Cho Associates Mortgage Group knows this first hand due to his own mortgage experience where she deals with mortgage lenders who gave him the runaround and eventually found his sponsoring Fannie Mae, Freddie Mac, Ginnie Mae sponsoring national lender online by doing his own intensive research. Alex is not just an Associate Contributing Editor In Chief for Gustan Cho Associates but is hands-on with all of his loan officers nationwide. If our viewers have any questions on getting approved for a mortgage loan, please contact Gustan Cho Associates and we will get any answers that you may need. We can be reached at 262-716-8151 or text us for faster response. Or email at [email protected] We are available 7 days a week, evenings, weekends, and holidays.

Mortgage Application Process And Documents Required For Underwriting 

Whether you are applying for a home purchase or a refinance mortgage loan, there is going to be a list of documents that you need to provide to the mortgage processor. The process needs documents by borrowers so they can process your mortgage loan application and submit it to the mortgage underwriter. Getting the documents needed upfront as complete as possible will determine how smooth your mortgage application process goes. A mortgage processor can submit the borrower’s loan package with missing information. But then the underwriter will definitely come back with conditions which will cause delays in closing your mortgage loan. The key is to get all of the documents the underwriter will need. Processors should submit the whole package as complete as possible so there will be very little to no conditions. Many mortgage processors will not submit any mortgage loan application package to underwriting even if there are one or two missing items.

Types Of Documents Required To Process And Underwrite Loans

Divorce papers, bankruptcy paperwork, child support paperwork, and alimony paperwork not only needs to be provided. Every single page of the documents needs to be submitted including blank pages if it is part of the documents. For example, if you had a prior bankruptcy, you need to provide the bankruptcy petition as well as the discharge paperwork. Just submitting the discharge paperwork will not suffice and the underwriter will come back and request the filing paperwork.

List Of Documents Required To Proceed Steps In Mortgage Application Process

Documents Required To Process Your Loan

Please provide us with the following items applicable:

  • Two months of most recent bank statement for deposit accounts (checking/savings) we need all pages even if they are blank
  • If it is a transaction history it must be from the bank teller and it must be signed, dated and stamped by the teller and must be for 60 days
  • Two years of tax returns and W2’s for salaried / hourly wage borrowers
  • Two years of tax returns year to date profit/loss statement and current balance sheet for self-employed borrowers
  • Page 2 of taxes must be signed by the customer and preparer if they were prepared by an accountant

Misc. Paperwork Needs To Be Submitted Steps In Mortgage Application Process

Misc. Paperwork Needs To Be Submitted

We will need all pages even if they are blank:

  • Mortgage Note and riders for existing mortgages on the property
  • We need all pages even if they are blank
  • Two most recent pay stubs covering one month of pay
  • Copy of homeowners insurance or name and address and phone number of insurance agent you will be using
  • Divorce decree if applicable
  • Alimony agreement and child support documentation if applicable we need all pages even if they are blank
  • 401K, Profit Sharing and/or Pension Fund statements and once again all pages need even if blank
  • If you using these accounts please provide me with terms and conditions for accounts for eligibility to withdraw fund from these accounts
  • Investments Stocks, Bond, Fund and/or Portfolio statements we need all pages
  • Even if they are blank
  • Copies of Driver’s License and Social Security card or other forms of identification are needed and required
  • Copies of fully executed purchase contract with all addendums needed and if the property is a Condo or Townhome please furnish the association name, phone number and contact person
  • Copy of Social Security award letters if applicable

For more information about the contents in this blog or other topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected]