Q - How does the loan process work?
A - The loan process can be broken down into 6 simple steps:
Organize Your Documents
For purchasing or refinancing your home/rental property:
- If you are salaried: provide your last two years W-2's and one month of pay-stubs; if you are self-employed: provide your last two years Federal tax returns, signed on page 2 with all schedules attached
- If you own rental property, please provide rental agreements
- To verify assets, please provide 2 months or 1 Quarter statements for each of your checking, savings and investment accounts. (all pages please)
- A copy of divorce decree and property separation agreement, if applicable.
- If you are NOT a US citizen, please provide us with a copy of your green card (front and back), or if you are NOT a permanent resident, please provide us with your H-1 or L-1 visa.
- If you're applying for a home equity loan, please provide a copy of your first mortgage note and monthly statement. The note can normally be found in your closing loan documents for your first mortgage.
- Declarations page of your homeowners insurance policy. (refinance only)
Owner's Policy of Title Insurance (refinance only) This document can normally be found with the copies from when you PURCHASED your home.
Getting pre-approved before you apply for a loan can help you understand how much you can borrow. When buying a house, you may get pre-qualified or pre-approved. You can get pre-qualified over the phone or on the Internet in a few minutes. A pre-qualification is not as beneficial as a pre-approval, where you go through a more rigorous process including verification of your credit, income, assets and liabilities. It is highly recommended that you get pre-approved before you start looking for a house. This will help you by:
- Finding out the maximum house you can buy, so you don't waste time looking for properties you can't qualify for.
- Putting you in a stronger position when you are negotiating with the seller, because the seller knows that your loan is already approved.
- Allowing you to close quickly, since your loan is already approved.
Compare Loan Programs and Rates
At the time you apply for a loan, we'll discuss with you available mortgage programs and pricing. To make a more informed decision, regarding which program is more beneficial to you, you need to consider the following things:
- Think about how long you plan to keep the loan: If you plan to sell the house or refinance in a few years, you may want to consider an adjustable or balloon loan. On the other hand, if you plan to keep the house for a longer time you may want to look at fixed loans. You need to pick the loan program that best fits your lifestyle and future plans.
- Understand the relationship between rates and points: Points (a point equals 1% of the loan amount) are considered to be prepaid interest and are tax deductible. The more points you pay, the lower the rate you will get.
- Keep an open mind regarding pricing options: Remember this phrase: The Total Cost of the Loan is What Matters Most.
Obtain Loan Approval
Once your loan application and preliminary loan documents have been submitted, we will start the loan approval process immediately. This involves verifying your credit history, employment history, assets (including your bank and investment accounts), and the value of the property in question. Based on your specific situation, additional documents or verifications may be required. To improve your chances of getting a loan approval, be sure you:
- Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
- Continue to make on-time payments on all credit accounts, even if you plan to pay off credit accounts in a refinance.
- Avoid making credit account purchases. Any credit debt increases may prevent you from being approved.
- Do not move money into your bank accounts unless it can be traced.
- Plan to be in town around the closing date, as you will need to be available for signing documents in escrow.
Close The Loan
After your loan is fully approved and loan conditions have been met, you will need to sign the final loan documents. This is typically done in either our office or the office of the settlement / title company. Be prepared to:
- Bring a cashiers check for your down payment and closing costs (if a purchase) or if the loan is a refinance and your cash to close exceeds $ 1000. Personal checks are not acceptable. (Checks should be made payable to the Settlement Company)
- Review the final loan documents. Make sure that the interest rate and loan terms are what you thought they were, and that the name and address on the loan documents are accurate.
Your loan will normally fund shortly after you have signed the loan documents. On owner occupied refinance and home equity loan transactions, federal law requires that you have 3 days to review the documents before your loan funds and monies are made available.