|Getting a home mortgage can be very stressful, Especially for first time home buyers. The lending climate has changed dramatically, even for the most seasoned buyer. Hopefully this outline will make this decision much less stressful.
The Application is usually done in person, with the mortgage professional you intend to use, However, many lenders have the documents you will need to complete on their website, so that you can prepare before meeting with the lender.
Once all of this info is received by your mortgage professional, they will be able to have access to your credit report. Credit reports will be discussed in depth in another article. This is however, the time to ask questions, NEVER ASSUME anything. There is NEVER a stupid question when it comes to the largest investment of your life.
Get all your documents ready beforehand. The lender you choose to work with, will give you a list of all the documents you will need.
You should be ready with those W-2's and paystubs, the phone numbers for your Human Resources contact and Insurance Agent and if you have an existing mortgage, a copy of your property tax bill.
Also, have some documentation of the assets you own. Make a list of all the "LARGER" items you own, ie: Retirement plan(s), autos, recreational vehicles, other properties, etc.
Depending upon the lender, all of these items may not be needed, however, its much easier to have them all upfront for your mortgage professional. This can save several days in the lending process if the lender/ underwrite of the loan decides they are needed. Its all about the preparation.
Your mortgage professional will review all documentation that you have. Once they have everything in order, they will present this to the Lender's underwriter. The underwriter is the person that decided if you are a worthy applicant. Again, The underwriting scenario will be addressed in another article.
You may get a call from the Processor during this process. This is USUALLY not indication of a problem, but may mean additional documentation is needed. In many cases this is a sign that you have a dedicated underwriter that is wanting to get you processed in a prompt manner.
Once you are approved, a good faith of cost estimate is required to be given to you by law, within 3 days. At this time, you should ask for copies of any changes that have been made to your original application by processing or underwriting.
Underwriting is where the underwriter looks at the picture your mortgage banker has painted and decides whether or not this loan makes sense. The underwriting process can take anywhere from 1 to 7 days in most situations. The underwriter makes the decision as to whether or not your application is approved.
What a wonderful development automated underwriting is! Now, rather than having to go to an actual underwriter for every step, this automated underwriting process can take care of many, and sometimes all, of the tasks that once had to be done by hand. A process that used to take up to 2 weeks is done instantly through the advances of technology.
"Conditions" are requests by the automated underwriting process or the underwriter for additional information in order to make a decision.
The VERY important item here is: IF your mortgage professional calls, and says there are conditions, usually copies of items needed, or an explanation of something that shows up on your credit report, it is EXTREMELY important to handle these items immediately.
Items that may show up as conditions: Verification of Employment, recent copy of bank statements, or possibly an explanation letter explaining a late payment or gap in employment.
Again, IF you know if these problems up front, a thorough mortgage lender will handle these items up front, at the time of application.
These are only a few examples of the types of conditions that may arise. As you can see, once there is a third party involved in having to clear up any issues, the time involved can lengthen considerably.
Please be patient with your mortgage professional and help them to clear these things up! Remember, it is not their fault that this appears on your credit history when it is not really your account!
Once all conditions are cleared a "clear to close" is issued by the bank or lender. When this has been issued a closing may be scheduled 2 to 3 days later. NOT before. I cannot stress this enough.
A clear to close should really be in hand a full week before the closing when it comes to a purchase, although many mortgage professionals try to push things through at the last minute. It doesn't matter that you have picked the day you want to close. More bad feelings have been created from trying to push things through and then rescheduling than are made when the decision is made a week in advance.
You have made it thru ALL OF THE HURDLES!!! This is the time, you commit yourself to making those home payments for the next, 15, 20 or even 30 years of your life. Providing your mortgage professional has done their job properly, this should the least stressful time of the process.
It is now the time to review and have all your questions answered regarding the loan docs. It is also important to bring with you to the closing the original Good Faith Estimate to compare and make sure all the closing costs are still the same.
Again, Providing you picked a good mortgage professional, that is doing their job correctly and disclosing all facts and figures up front, this should NOT change. Providing the numbers are all the same, this is the time you will sign. IF the numbers have changed, DO NOT SIGN
.this is the time to walk!
At this point your mortgage professional should be your advisor, not your adversary. If the numbers are not right, the mortgage person should be the first one reaching for their coat. It does happen that papers will arrive with the wrong numbers on them.
If you are getting an explanation of why the numbers are different rather than an offer of fixing the problem so that it is right, chances are that your mortgage person knew about this ahead of time. Take this as a red flag and leave. You can always get another mortgage, you can always get another mortgage person.
Of course, there are also times that the mortgage person has made a mistake and the numbers are actually correct. If the explanation is satisfactory and fully explained so that you understand it, this can be ok. Just make sure you understand any explanation.
The Mortgage process is intense, and can be very stressful. Selecting the right mortgage professional can help you walk thru this process, in a painless manner.