What to expect when applying for a mortgage

Congratulations for beginning the process of achieving the American Dream: owning your own home!
To accomplish this, unless you are a close relative of Bill Gates, you will need financing to purchase your new home. This is where we come in. Your loan officer and loan processor are responsible for following your loan from application through its closing. We will keep you informed throughout the process and request any additional information that will be needed to ensure a timely settlement.

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•Interviewing
During the application, the loan officer begins by asking some questions regarding your income, monthly debt payments, and credit history. This will help us to determine your specific loan needs. This is a very important step that allows us to ascertain what types of mortgages are available to you and to explain the benefits of different programs.

•Prequalification
Prequalification based on income and debts involves the determination of two ratios:

• Housing-to-Income ratio: this compares your proposed monthly mortgage payment to your monthly income.
• Total Debt-to-Income ratio: this compares your proposed monthly mortgage payment plus all of your other monthly debt payments (credit cards, car loans, student loans, etc.) to your monthly income.

These two ratios, along with your credit history, and used during the underwriting process to decide if you meet the loan requirements.

•Application
After your preliminary qualification, a loan application is completed which provides details about you and your financial position along with information about the subject property. The information you will be providing can be very personal, perhaps making you feel uncomfortable at times; rest assured that your confidentially will be respected and protected. It is crucial that you give accurate and truthful information throughout the process. This will speed your application along and help eliminate the chance of any unexpected surprises which could delay or deny your mortgage loan. At application, you will be asked to provide supporting documentation. This may include such documents as: W-2’s, tax returns, current pay stubs, and bank statements, to name a few. In addition, you will be provided with a Good Faith Estimate of the settlement charges associated with your closing, and a settlement booklet which describes these charges in greater detail.

•Processing
A loan processor will examine your file to ensure all information is complete, accurate, and meets our requirements. The processor will order verifications, appraisals, credit reports, and any other necessary documents. The goal during processing is to gather accurate facts which can later be used for making decisions about your mortgage loan. Once the loan file is complete, your file will be submitted for underwriting.

•Underwriting
Underwriting involves the evaluation of all the documents in your file. Based on the information presented, your loan will be approved or denied. Additional documentation may be required at this time to clarify any questions the underwriters may have.

•Pre-Closing
Pre-closing is the last step before final settlement. During this time, a closing is scheduled for the loan, title insurance is ordered, and all approval contingencies, if any, are met. These could include a survey of the property, pest inspections, or well and septic reports, to name a few.

•Closing
This is the final step. At closing, documents are prepared and signed. Title of the property will then transfer from the seller to you!