What is the mortgage process?
The mortgage process is fairly straight forward. Although every borrower, loan file and loan program have their own requirements and specifics, the overall process can be summed up as follows:
This is the beginning stage. At first you will meet or speak with your loan officer and review employment history, housing history, and other details that affect qualifications. Your loan officer will request several documents from you, run a credit report and determine which loan program at which lender would be a best fit. At this point you will be presented with a loan application and several state and federally required disclosures for review and signatures, all of which are required to get packaged for underwriting.
Once your loan officer has a completed package from a borrower and has obtained any required supporting documents, the file is submitted to a lender. Each lender will review a file for completeness and in most cases, will then send an email to the borrower with a link to the lenders electronic-disclosures for acknowledgement.
Once set-up is complete, your file is placed in line for underwriting. Underwriting is basically risk assessment. The underwriter will review what was submitted and will issue a disposition on the file. Once the disposition is issued, the results are sent to the loan officer for review with borrower. When the loan is approved, it will almost always be a ‘conditional approval’ subject to additional underwriting requests. The underwriting process takes 24-72 hours, depending on the lenders speed, market and loan program.
Conditions from an underwriter are items they will need cleared before they will allow the file to move forward to loan documents. A majority of conditions are ‘behind the scenes’ with corrections or updates requested from Title or Escrow, IRS tax transcripts requests, Appraisal revisions, etc. Typical borrower conditions may include: explaining information on a credit report, sourcing deposits into a bank account, signing tax returns, paying past due income taxes, etc. All conditions will be reviewed with your loan officer who will be clear as to exactly what is requested to ensure a smooth closing. Depending on what is requested, this could take 24-72 hours as well.
Once the underwriter is satisfied with their approval conditions, the file is moved along to a Doc Drawer. The Doc Drawer confirms the loan details and then sends a loan package to escrow with instructions. Escrow will then put the package together to deliver to a Notary who will then schedule a signing time and location with the borrower.
The signed loan package is then sent back to the lender. They will be reviewed for completeness by a Funder who will confirm figures and coordinate funding with escrow. If there are no outstanding items, the lender will set up a wire of funds into escrow. At this point, if there are any funds due from the borrower, they are to be wired as well. After escrow confirms receipt of funds, they will have title request recording with the County.
Title will let everyone know when they receive recording confirmation from the County. This means the lenders interest is secured by the property and gives escrow the green light to disburse funds. When a loan disburses, escrow sends out funds to pay off any required debts. These include: previous mortgages, property taxes, insurance, borrower proceeds, etc. After the loan is recorded and funds are disbursed, the transaction is closed.