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Pre-Qualification
Pre-qualification is the first step of the loan process, and occurs before the loan process actually begins. It is usually the first step after initial contact is made. The lender gathers information about the borrower's income and debts and makes a determination about how much the borrower may be able to afford. Different loan programs may lead to different financial values, depending on whether the borrower is qualified for them, so it is advisable for the borrower to get a pre-qualification for each type of program they might be suited for.
Application
The application is the actual beginning of the loan process and usually occurs between the first and fifth days of the initial loan process. The borrower must complete a mortgage application with the loan officer and supply all of the required documentation. The borrower is then given details of the various fees and necessary down payments . The borrower with then receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) within three days that itemizes the previously discussed rates and associated fees for obtaining the loan.
Processing
Processing occurs within 5 to 20 days of the loan. The borrower's credit reports and debts and payment histories are reviewed. If there are any unacceptable late payments, outstanding debts, etc, then the borrower is contacted for a written explanation. The property survey and appraisal is examined for any issues that may require further attention. The processor also reviews the appraisal and survey and checks for property issues that may require further providence. The final results are then turned over to the lender.
Underwriting
Lender underwriting occurs somewhere within 3 weeks to a month. The underwriter must determine if the processor's information deem the loan as acceptable. If the need for more information arises then the loan is "suspended" until more documentation can be provided by the borrower.
Mortgage Insurance
When the borrower has less than 20% of the loan amount to put towards a down payment, a mortgage insurance underwriting becomes necessary. The loan is then submitted to a private mortgage insurer who provides extra insurance to the lender in case of default. If more information becomes necessary, then the loan is "suspended". Otherwise, it is usually returned back to the lender within 48 hours.
Pre-Closing
Pre-Closing occurs within 25 to 30 days of the initial loan process. During this phase, the title insurance is ordered and if necessary, all outstanding contingencies are met. Finally, a closing time is scheduled for the loan.
Closing
The closing usually occurs between days 25 and 45 of the loan. At the closing, the lender supplies the loan in the form of a cashier's check, draft or wire to the seller in exchange for the property title. At this time, the loan process is complete and the borrower buys the house.
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