Steps Of The Mortgage Process And How To Close On Time
This Article On Steps Of The Mortgage Process And How To Close On Time
As a result of the mortgage crisis of the years past, the mortgage industry has become very regulated:
- The steps of the mortgage process have gone through many changes
- Many layers of fact-checking have been added to the steps of the mortgage process
- Those not familiar with the system may experience a somewhat stressful experience
- However, with a competent loan agent, this can be reduced to a minimum amount of stress
- Here is an outline of when in the process the consumer may be asked to provide additional information, documentation or clarification
- There are 5 distinct steps in the process which we will discuss on this BLOG
Pre-Approval Steps Of The Mortgage Process
The pre-approval stage of the mortgage process is the most important step of the overall mortgage process. Over 75% of our borrowers at Gustan Cho Associates Mortgage Group are folks are the following:
- Borrowers got a last-minute mortgage loan denial by another lender
- Borrowers are going through the major stressful mortgage process
- This is due to not being properly qualified
- Many borrowers are getting conditions after conditions after their conditional loan approval by underwriters
At this stage, the Mortgage Loan Officer will require that the consumer provide all income and asset documentation to determine mortgage qualification.
This includes the following:
- A credit report
- W-2’s • Paystubs
- Most recent Federal Tax return
- 2 Months of bank and investment statements
Credit will be reviewed.
- The loan data will be put through underwriting and a pre-approval will be issued
- Because it can be weeks or even months from the time the borrower is pre-approved to the time there is an accepted offer on a property the loan officer should address anything that comes up on the credit
- Or in other documentation and educate as to what will be required once the loan is going “live”
- We do not take pre-approvals lightly as some companies may pass out pre-approvals like candy
If pre-approved with us that means borrowers will get approved and close on their loan.
Full Mortgage Loan Application
Now the loan is official and we have an address and the Loan Officer will update any documentation already submitted (documents cannot be older than 90 days).
The borrower will be asked to address the following:
- Any credit inquiries or issues on the credit report
- Deposits that appear on bank statements in excess of $1000 will require source documentation
- A full mortgage application package will be completed by loan officer and borrower
- Submitted to Processing
At this time the Mortgage Processor will review the package submitted by the loan officer.
Processing Stage During The Steps Of The Mortgage Process
The mortgage loan processor will order:
- Mortgage processor will be assigned to the file
- Processor role is to make sure that all documents are ready and complete for submission to underwriting
- A title examination/legal work
- An appraisal will be ordered
- If needed a condominium questionnaire to be sent to the appropriate party for completion
- If the Processor sees something that the Loan Officer missed they will request this documentation now
Because of the complexities of the mortgage process, the second set of eyes is very important to ensure that no documentation is missing and that all necessary information is obtained.
Submission To Underwriting
Once the appraisal report is back the processor is required to order a “Fraud Guard” report. This report often runs 25 or more pages and reviews everything and everyone involved to ensure that no party engaged in the sale has been involved in fraudulent activity in the past.
This includes the following:
- The borrower and their background
- Property and real estate professionals involved in the transaction
The processor will also review the appraisal, the home information, and all documentation prior to submitting for full underwriting approval.
The mortgage underwriter is responsible for reviewing the entire loan package and issuing an approval.
- Once again another set of eyes is reviewing all the details for compliance to all regulations and guidelines as established by Fannie/Freddie/HUD and state and national regulators
- If questions or concerns arise the underwriter can approve the loan but make that approval subject to additional documentation
- There is usually very little documentation or verification at this point because our company will have given it to the underwriter complete as possible
- We do not want to hassle you for documentation and or verification over and over
Instead, we like to have it all hammered out so by the time it reaches underwriting you’re simply waiting on approval.
After The Loan Is Approved…
After the borrower gets a conditional loan approval by a mortgage underwriter, the next step is to clear conditions for a clear to close.
- The file will go back to the mortgage processor
- The mortgage processor will be working with the loan officer and borrower to be clearing conditions so the file can be submitted for a clear to close
Clear To Close means that the file will be ready to have docs prepped and the lender is ready to fund the loan.
Steps Leading To Conditional Loan Approval
Here are the steps proceeding the conditional loan approval:
After Underwriting –
- One week prior to closing the lender is required to conduct a ‘verbal verification of employment’ to insure that the employment status of the borrower/s has not changed
- Days prior to closing the lender is required to run a ‘credit refresh’ to insure that no new debt or credit has been obtained by the borrower that may impact their mortgage qualification
- If any of the documents at the time of closing are beyond 90 days old the borrower will be asked to provide updated documentation such as a pay stub or bank statement
If the credit report is beyond 90 days old it will be re-pulled which could also require a request for additional documentation or clarification.
Mortgage Process After Closing
After Closing –
- The loan is re-reviewed internally and by the end investor and at this time there could be another request for documentation
- You can think of a loan officer much like an attorney who is representing their client in court
- Your loan officer is representing you to the lender
- It is very important to have a competent, efficient loan officer who is going to bat for you
- The mortgage process is can get complicated
- There are many time throughout the process when a borrower could be asked to produce more and more information if it is- not handled correctly
- This can be very frustrating and annoying and make the borrower feel like the lender is at fault
- It is important for consumers to be educated about the process and understand the reasons behind them to relieve potential frustration
It is equally as important that Realtors and the consumer work with a thoughtful, thorough, smart and efficient lender to insure a quality experience and happy closing.
About The Author Of Steps Of The Mortgage Process
This blog on The Steps Of The Mortgage Process was written by Michael Gracz. Mike is a contributing associate editor and writer for Gustan Cho Associates.
Michael is the National Sales Manager and licensed mortgage loan originator of Gustan Cho Associates. Mike Gracz is also in charge of The Gustan Cho Team Rapid Response Group at Gustan Cho Associates.
Michael Gracz is an expert in originating the following:
- FHA Loans with no overlays and credit scores down to a 580 FICO
- Gustan Cho Associates has no lender overlays on all VA Loans
- USDA Loans with no overlays
- Conventional Loans with no overlays
- NON-QM Loans which are alternative financing where no waiting period is required after bankruptcy and/or foreclosure
- Bank statement loans
- No doc or income verification loans
- Non-Warrantable Condos and Condotel Financing
- 95% LTV Jumbo Mortgages
- FHA 203k Rehab Loans
- Reverse Mortgages
- Second Homes and Investment Properties
Michael Gracz represents Gustan Cho Associates Mortgage Group, a five star national Fannie Mae, Freddie Mac, Ginnie Mae Direct Lender with a national reputation no lender overlays and closing mortgage loans in 21 days. Mike Gracz and the mission of Gustan Cho Associates is to make the dream of homeownership a reality for families. Mike is available 7 days a week, evenings, weekends, and holidays to answer any questions or go over any case scenarios you may have. Mike can be reached at 262-716-8151 or text for a faster response. Or email us at [email protected]