Obtaining a mortgage can seem overwhelming. Here is a simple break-down
of the entire process.
Pre-Qualification
Pre-qualification occurs before the loan process actually begins, and
is usually the first step after initial contact is made. Your Loan Consultant
will gather information about your income and debt and make a financial
determination about how much house you may be able to afford. Different
loan programs may lead to different values, depending on whether you
are qualified for them, so be sure to get a pre-qualification for each
type of program you are suited for.
Application
The application is actually the beginning of the loan process. The Loan
Consultant will help you complete a mortgage application and gather
all of the required documentation for processing. Various fees and down
payments are discussed at this time and the borrower will receive a
Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) within
three days that itemizes the rates and associated costs for obtaining
the loan.
Processing
The “processor” reviews the credit reports and verifies your
debt and payment histories as the Verification of Deposit (VOD) and
Verification of Employment (VOE) are returned. If there are unacceptable
late payments, collections for judgment, etc., a written explanation
is required. The processor also reviews the appraisal and survey and
checks for property issues that may require further discernment. The
processor’s job is to put together an entire package that may be
underwritten by the lender.
Underwriting
The lender underwriter is responsible for determining whether the combined
package passed over by the processor is deemed as an acceptable loan.
If more information is needed, the loan is put into “suspense”
and the borrower is contacted to supply more documentation.
Pre-Closing
During pre-closing, the title insurance is ordered, all approval contingencies,
if any, are met, and a closing date is scheduled for the loan.
Closing
The closing is the final step in which the property is transferred to
you. In Idaho, the closing is conducted by a title insurance or escrow
company. At the closing, you will sign many documents, including:
- Settlement statement
- Note
- Deed of trust/mortgage
You will probably be required to pay any remaining down payment and
closing costs. A certified or cashier's check rather than a personal
check is usually required. After the signing, all the final documents
are sent back to the lender for final review. Once approved, the loan
is considered “funded” in which the buyer now owns the property.
This typically occurs 24 hours after signing documents at the title
company.
