The home loan process is often confusing and frustrating. Follow these steps to demystify it.
Unforeseen delays, such as problems getting an appraiser or information from an outside source, will slow the loan process.
Lenders will require a paper trail for money that has been deposited into your account. The paper trail will verify from where the money came and that the money is not a loan that will have to be paid back. So, if the underwriter discovers that a large amount of money has been deposited into your account, the underwriter may want documentation of where it came from.
When you go to sign your loan papers, bring your driver's license or some form of picture identification. You will most likely also need to bring money to settle your transaction. Make sure to ask whether you will need a cashier's check or any other special requirements to complete the transaction.
- Understand that in order to finance or refinance a loan the lender requires documentation to verify and substantiate your employment, credit and financial situation to assure its investors that you have the ability to repay the money. This documentation may consist of tax returns, recent pay stubs, bank statements, verifications of employment, deposit and rent or mortgage, appraisal, purchase agreement, divorce decrees, bankruptcy papers and any other information the lender deems necessary.
- Understand that you will have to provide a completed loan application and the requested documentation to your loan agent. The loan agent will be the intermediary between you, the borrower, and the underwriter. The underwriter is the person who goes through the documentation and information you have provided with a fine-tooth comb to make sure everything fits the program requirements. You will not be able to speak with underwriter - it is the loan agent's job to communicate information to and from the borrower.
- Expect to wait. It may take several days to a week to get the initial response from the underwriter. The underwriter will either approve the loan as it is or, more likely, provide a list of items that need clarification or additional documentation.
- Expect to be asked to provide additional items. Once you give these to your agent, it will be a few days before you hear back again. The underwriter may come back to the agent several times with certain "conditions." Don't be concerned. The underwriter is simply doing an underwriter's job. At this point, what you have is conditional approval - meaning, your loan is approved pending removal of these conditions.
- Understand that the entire loan process typically takes between two and four weeks, possibly longer, depending on the particular circumstances of the loan. Loans for self-employed people, people with poor credit, or people with unusual circumstances often take longer because of the additional documentation required.
- Realize that once the loan is approved, the loan papers will be sent to the escrow/title company or your attorney. The escrow officer or attorney will add other documents to the file created from information received from the lender. Once these documents are prepared, the escrow officer or attorney will contact you to set up an appointment for you to come in and sign your papers.
- Expect to wade through and sign a mountain of papers. The escrow officer or attorney should provide you with a copy of everything you sign.
- Understand that from the date you sign your papers, it will be another two or three days until the loan is funded, which is when the money is transferred.
- Know that the loan will close, or record (with the county), one or two days after the loan has been funded. Once the loan is recorded, the transaction is complete.