Hope for Homeowners
HR3548 Home Buyer Tax Credit
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FHA Loan Process
Just What Is The Mortgage Loan Process?
First of course, you should shop interest
rates and find a local mortgage broker that you feel comfortable with, is
experienced and reputable.
You go into the brokers/bankers office and you fill out a 1003 (loan
application). You also bring copies of your bank statements, retirement
accounts, 401ks, W2s and tax returns and what ever else the Loan Officer
requested. The Loan Officer makes copies of the documentation and gives
you back your originals.
An application can be filled out on line but I don't recommend you do
that. Filling out an "on line" application is ok if you know
whom you are dealing with and they are local. This can save you a trip to
the office. But you should never just fill out an application on line if
you don't know who they are or if they are not local (even if they are a
major branded company). Do not complete any request that suggest multiple
offers as these companies sell your information over and over.
During the time you sit with the loan officer he will review your
documentation and with most companies he will pull your credit report
while you are with him.
During your conversation the LO will tell you "based on the
information he has" that you qualify for "this type" of
loan. He should also at this time tell you about all loan types you
qualify for. He will also discuss interest rates and terms. He will have
you sign several disclosures.
At this point you guys decide on your course of action. HE SHOULD AT THIS
TIME GIVE YOU A GOOD FAITH ESTIMATE. The LO then puts all your official
paper work in the file and turns it over to the processor.
The processor makes sure all the documents are in the file, puts the
paperwork in order, enters it into DU or LP (automated systems) and then
receives an automated approval or turn down. This is always "subject
to" supporting documentation including appraisal, inspections, and
The processor then verifies employment, verifies residence, orders an
appraisal, and orders a title. I won't go into the documentation
requirements here but this is when things start to happen in parallel.
When the processor has received all these verifications, the appraisal,
and basic title work, they will review the file again and if it still
qualifies they will forward the file to the lender's underwriter.
Note: At this point she does not have a title policy or guarantee, but the
title company has reported that there are no clouds on the title. Shame on
the processor if she forgot to order this because it can delay your loan
later. The actual title policy is not issued until later when the
underwriter gives a "clear to close".
The lender's underwriter then reviews what is in the file, runs the
numbers, and verifies that all of the documentation is present and that it
supports the DU or LP approval.
They also review the appraisal and the title at this time. This is part of
the underwriting process. If there are problems in the appraisal review or
title they will address them to the processor.
The processor will communicate with the LO and appraiser and/or title
company to resolve the issues. This is part of the underwriting process.
The processor collects the requested "stuff" and then forwards
all information to the underwriter.
The underwriter is then happy and gives an "ok to close". This
ok is usually subject to receiving the title insurance policy from the
title company. The title company faxes or transmits electronically the
info to the lender. Then the Lender sends the closing documents to the
closing company. This can sometimes take two to three days.
You have an appointment to close. You sign the documents and your loan is
closed and you get the keys.
Processing should only take a week after you have provided all the
documentation requested. The underwriting normally takes about 14 to 28
days. This time includes communicating with the processor if there are any
Every loan file is different; each Lender has different requirements and
markets vary, so it is impossible to give an exact duration for each step.
Understand the sequence and demand your
loan officer gives you full details about what is going on. If you don't
understand don't be afraid to say so. This is YOUR investment. Demand the
facts. LO's sometimes use industry terminology, ask what they mean if you