The Loan Process
By Chris Hunt
During this stage you will complete a mortgage application online, I will review your credit history and complete an analysis based on the amount of money you would like to borrow. Questions for the application will focus on the last two years of housing and employment history as well as assessing income and available assets. If all requirements are met I will issue a mortgage pre-qualification letter that will be used by your Realtor when making offers to purchase property. Also I will send you a document checklist so you can begin to gather the required documents to be submitted to the lender.
Under Contract – Processing Begins
Once a property is secured I will review all the loan documents I have, request any updated documents needed and send your file to my processor. The processor will review the package, request any missing documents, and prepare your loan documents for signing. Typical turn time 48 hours.
Loan Application Signing
Loan documents will be sent by the processor through electronic signature software. There will be a couple documents that will require wet signatures (actual pen signatures). Once we receive the executed loan package, the processor will submit your loan to the lender, order the appraisal and title work from the closing agent. It’s important to note at this stage that the fees and rates disclosed are still estimates.
Submission to Lender
The documents will be reviewed by the submission department to ensure the presence and preparation of all necessary documents for underwriting. Disclosures will be issued directly from the lender to the borrower pertaining to the receipt of the application, interest rates and settlements fees. Once complete the file is sent to underwriting. It’s important to note at this stage that the fees and rates disclosed are still estimates.
The appraisal is ordered from an AMC (Appraisal Management Company). The AMC’s require payment upfront to complete the inspection. We will request a CCA (credit card authorization) from the borrower to pay for the inspection. The process is as follows; report ordered from AMC, assigned to an appraiser, appraiser schedules with Realtors/homeowners, inspects property, gathers data and completes report, delivers to AMC, AMC completes QC (quality control-review of the work/data) then delivers the inspection report to the lender. If the value of the property is less than the sales price, all parties involved will discuss and hopefully agree on new terms. Typical turn time is seven to ten business days.
The underwriter will review the documents for accuracy making sure the loan programs guidelines are met for the loan requested. They will review the application, credit history, income calculations and property appraisal. If the loan is approved the underwriter will issue a CLA (Conditional Loan Approval). Typical turn time is five to seven business days.
After we have received the CLA from the lender we will discuss locking in your interest rate and the terms of your loan. I will send you an email explaining your options and you will select the terms best suited for you. For every loan lock there needs to be a time period selected in calendar days ex: 15, 30, 45 60 etc, that the loan is locker though. This time period must continue until the day of through the closing date. Once a decision is made to lock in your rate and terms I require an email response with your approval then I will complete the lock process.
Conditional Loan Approval (CLA)
The CLA is the agreement that the lender will fund your loan based on the fulfillment of certain conditions. These conditions can consist of home owner’s insurance binder, completed title work, any LOE’s (letters of explanation), updated assets statements etc. The processor and I will review the CLA; then request the conditions form the appropriate person or vendor. Once all the conditions are gathered, they will be sent back to the underwriter for review and upon satisfaction the conditions will be cleared.
Underwriting (Clearing Conditions)
The underwriter will review the conditions, clear the ones that are satisfactory and issue another CLA if needed. Once all the conditions have been cleared by the underwriter, they will issue whats called a CTC (Clear to Close). Typical turn time is three to four business days.
Clear to Close (CTC)
The CTC is the final commitment from the lender to lend funds. Once received we can begin the closing process. The processor will complete any paperwork needed by the lender and submit these documents to the closing department. The closer will send the closing package and instructions directly to the title company. Typical turn time is two business days.
Closing | Funding
The title company will review the lenders instructions and prepare the CD (Closing Disclosure) and ALTA (also called settlement statement). These documents will determine the exact amount of funds needed for closing, then the borrower will wire funds to the title company. It is important to note the CD must be delivered to the borrower three days prior to closing.
After the borrower signs the closing documents the title company will send the documents to the lenders funding department. The funder will review the documents for accuracy. If they are acceptable the lender will issue a funding number, which is the authorization needed for the title company to release funds to the parties and close the transaction.
I hope this explanation helped you understand the loan process. If you have any questions please don’t hesitate to ask!