Hello everybody today we are going to discuss the basic steps in the mortgage loan process. First of all let me give you a little background about myself my name is Chris Duffy with supreme lending and I have been originating loans for over 12 years supreme lending his is a mortgage banker and was founded in 1999.
One thing I want to give you a little clarification and difference between a banker and a broker bankers are where we basically process your file underwrite your file fund your file all in-house when you hear somebody that’s a broker they’re going to send your file off to a third party and or and lose a lot of control over the process so it’s a lot more efficient to be dealing with mortgage bankers versus a mortgage broker.
Where to Begin
okay where to begin that’s the big question the home loan process can seem very confusing and overwhelming at times. Just keep in mind throughout the whole process we’ll have a mortgage expert involved to help you through through the buying experience.
Okay so what we’re going to do is show you different loan scenarios where you can pick the best scenario to meet your current financial needs. The first step in applying for a loan is to get pre-approved by a mortgage lender. before you even get into a car with a realtor you’re going to want to go through this step.
Now there’s two different types of pre-approvals, ones pre-qualification and what is a pre-approval and there’s big differences between the two. if you look at the slide being pre-qualified your credit report will be pulled and it’s going to be reviewed by the mortgage originator. Income and asset information is taken verbally but it’s not verified.
On a pre-approval we’re going to pull your credit report and review that and then we’re also going to ask you to provide us with the supporting documents that need verifications. we’re going to verify your income we’re going to verify your assets and we’re going to be be also verify funds for closing. being pre-approved is much better being pre-qualified.
A lot of listing agents when you look at their house they will not accept a pre-qualified letter they want a pre-approval and they know that there’s no surprises coming down the road. okay on this next slide what we’re going to discuss is just an overview of the total loan process and the number of days it takes to complete a loan.
At supreme lending we average probably anywhere from twenty to twenty-five days to close a mortgage loan. Some of the bigger national banks you will notice are taking longer than that will take 45 to 60 days
But here’s a couple of the things that happen at during throughout the course of the process at loan application we’re going to meet with the clients. the application is taken credit is pooled and we’re going to review your supporting documents.
This is at this point in time you’d be basically pre-approved and that would a pre-approval letter would be provided to your Realtor and to yourself this way when you go to make an offer at a home you’ll be prepared and have everything you need.
Once you’re under contract your loan will go into what’s called loan setup. at this point in time they’re going to basically get the title work ordered verifications ordered, appraisal ordered, a flood certificates ordered and some other miscellaneous reports needed for the file that’s going that that process can take anywhere from two to three days just it.
Just really depends on how quick those verifications come back the next step the loan is going to move into the processing stage processing stage could take anywhere from five to seven days and this is where your file is actually getting prepared for the underwriter to review. at this point in time verifications are received and reviewed and final automated underwriting reports are run.
The next stage and moves to underwriting and underwriting stage it takes anywhere from two to three days they’re going to do it about the underwriter is going to do an evaluation of the credit and the property and it’s going to make sure everything adheres to the agency guidelines.
At this point in time you’re either going to go straight to a full approval or to a conditional approval and a conditional approval is when your file has been approved by the under but there’s a couple other items that they may want to review.
After you provide those conditions back we submit it back to underwriting and we get a full loan approval at this point in time the docs are ordered and the clothes and documents are sent to the title company for your final settlements statement to be prepared.
What to expect it more at the mortgage loan application first of all there’s a couple ways you can fill out an application you can either go to my website which is team Duffy loans calm or I can take your application over the phone or in person.
At this point in time at the applications we’re going to ask you certain questions stuff them certain things about your life such as employment history savings habits marital status. Do you have any ownership of any additional properties and other questions to determine your ability to repay the loan.
Also at this point in time your credit report will be pulled and we’re going to review that for credit and financial history the important documents that you’re going to need at application is two months of all pages of all of your bank statements checking saving savings investment retirement and stocks and any other accounts that that may hold your down payment money.
We’re going to also request 30 days of pay stubs your most recent two years of w-2s your most recent two years of tax returns and a copy of your driver’s license. it’s good to have all these documents up front so start saving your pay stubs start saving your bank statements.
Important information to complete at your application an application if you do if you do have a property at this point in time we may look at locking in your interest rates. Interest rates can be pretty volatile at times and they do fluctuate from day to day so what we’ll do is evaluate what’s happening in the market and determine if this is a good time to lock in your interest rate.
The next step is is points a borrower can pay points and what points are basically a percentage of your loan amount if you want to buy down your interest rate basically 1% of we’ll probably buy down your interest rate by a quarter percent that they did the determining factor there is going to be this.
how long do you plan on staying in the house if it’s a short period of time I would not recommend you buy down your interest rate. If you’re going to be in the house for a long period of time then it’s something we can look at and we’ll do a side-by-side comparison to see that fits your financial needs.
The down payment typically lenders like to see a 20% down payment and that’s going to be on a conventional loan and when you put 20% down you are buying yourself out of what’s called private mortgage insurance.
Private mortgage insurance protects the lenders and it’s an additional cost to you, but it really provides you with no benefit but just protects protects the lenders. Down payments: the lowest down payment we have is that three and a half percent and that’s on an FHA loan and basically after we have your credit pooled and look at your qualifying documents we will look at different loans to determine what’s the best for your financial situation.
There are a couple different costs associated with your loan you have closing cost and then you have prepaids the closing costs are one-time expenses that are be incurred and charged to you on your loan. These fees include application fees any points title title insurance credit report and processing fees will provide you at the time of application or actually three days within application.
Which you’re under contract we have a full application will provide you with what’s called a good faith estimate this good faith estimates is an estimate of all the closing costs associated with your loan when budgeting for your new home make sure you are factoring in the closing cost and the prepaids.
In regards to closing costs and pre page there’s different ways we can structure your loan, so at the time of that we’re providing you an application well I will provide you with several different scenarios so you can see which one’s best for you.
We can either structure it with the seller paying a portion of your closing cost or we can structure it with the lender or me paying a portion of your closing costs prepaid expenses are reoccurring costs associated with your loan these items include interim interest from the day of closing to the end of the month.
It’s going to include one year of hazard insurance collect it upfront then this is also going to be where we establish your escrow account we’re going to put three months of taxes and three months of of insurance into your escrow account.
This way when your taxes and your insurance become due they will be paid by your loan servicer and it’s not something you’re going to have to pay out of pocket so these costs will be included in your monthly payment on your loan and then as under pre page you’ll also have any upfront HOA dues if the house is located in the neighborhood that has a homeowner’s association.
After your application you’re under contract your loan is going to be submitted to processing when your vote submitted into processing they’re going to be doing those several different things they’re going to first of all get title opened with the title company by sending a title request we’re going to have homeowners insurance is going to be homeowners insurance will be ordered which you will have the ability which to pick your own home home insurance provider you’ll provide us with that.
With that information and then we’ll send over the request for insurance after at this point in time we’ll also order your appraisal and the appraisals ordered to insure the property meets market value and it meets the standards of FHA and Fannie Mae.
At this point in time they’re also going to order your verifications of employment they’re going to send over written verifications of employment to your employer and then we’ll also follow up the day before closing with a verbal verification to ensure that you’re still working at that same job that you that you were at the beginning of the process.
After processing the file submitted back submitted to the underwriter once all documents are gathered and processed your loan pockets will be submitted to the underwriter who assess if you are eligible for the mortgage loan you are applying for the underwriter is going to either approve or reject your application based on your credit history, your employment history, your assets, and your debt to income ratios.
The loans are underwritten to all agency guidelines of either Fannie Mae Freddie Mac HUD or FHA or VA depending on the loan program selected at this point your loan is going to receive from the underwriter a conditional approval underwriters usually will come up with some additional items or documentation they want to see before they sign give final approval on the loan.
This is not a time to be concerned because your loan has basically been approved and they are just looking for some additional information to make sure the loan meets agency guidelines we have now reached the final steps of the closing process.
At this point in time the documents will be sent to the title company for you and the seller to sign funds such a fun such as any remaining down payment closing cost and prepaid expenses will be due once you receive the settlement statement be sure to compare closely to the Good Faith Estimate you received at the beginning of the process to be sure you’re getting what you quoted once all funds are collected and the contract has been routed verified and reviewed.
The tile is transferred and the purchase price of the funds are dispersed to the seller after this step you can take over the keys to your new home congratulations and please feel free to contact me contact me at any time you have any questions thanks for your time and have a great day.