Comparing before year 2008, getting a mortgage loan is much complex and harder. Lenders usually ask more documents and questions as regulation change.
This article try to simply explain how to get a loan for a residential real estate property purchase.
- Get pre – approval or pre – qualification letter. This should be done before you go out to find a house.
Contact a loan originator, send required loan application, support documents to get pre – approval or pre – qualification letter.
An experienced professional can also help you understand your finance and tell you how much you qualify. You know what kind of house you are qualified to buy and how much payment will be.
Most loan originators offer free pre-qualification, pre-approval letter. Some ask reviewing borrowers income, asset documents and some just based on verbal talk. When the loan originator/lender spend more time to review more documents, usually your loan process after you get a contract will be more smooth.
Borrower need to know ion this stage, what loan product will be used. What credit score (even estimate). What kind of rate (and apr) can get (also estimate).
What AAXY Mortgage do in this stage: Answering borrowers questions. Review borrower’s financial situation and recommend the best loan product. Help borrowers improve/repair credit if need. (AAXY Mortgage does not offer credit repair services but consulting for how to improve credit, fix errors). We also work with different professionals to answer questions real estate related. Recommend DO and DO NOT before purchase finish.
- After have a contract executed,
borrower should contact the loan originator to get official loan package with Loan Estimate and other disclosures.
Borrowers sign all required document, provide updated income, asset and liability documents.
The loan originator (usually work with a loan processor and assistants) send the loan to underwriting. Order appraisal, order title documents.
The loan originator (work with loan processors and assistants) order verification (employment, tax return, borrower’s identity, property tax, etc).
Underwriter review the loan package and all support documents. Approve (or suspend) the loan with conditions. Most loans get approval with conditions in this stage.
Loan originator (work with a loan processor and assistants) work with borrowers, title company, to get documents to satisfy underwriter conditions.
When all loan conditions get satisfied, the loan get a CTC (clear to close) status.
What we do in this stage: to get a loan approved and close on time, understand the underwriting guide is very important. If prepared well, the underwriter would have no or very few conditions. We review each loan in detail to prepare document to have loans with very few conditions. Our average underwriter touch is less than 2. That can get loan CTC quick.
- After Loan get CTC.
The loan goes to lenders closing department that prepare closing document. Then send to an attorney firm to have closing document reviewed (All Texas loans have attorney review the loan documents).
The same time, lender will do final quality control, final verification of borrower’s income and credit. If borrower’s job change (lost job), liability (more debt), the loan may go back to underwriting.
What we do in this stage: As a direct lender, we can prepare loan doc before loan get CTC so save some days. In real estate transaction, time is very sensitive.
- Closing and Funding.This time, the closing documents are sent to the title company handling the closing. Title company get buyers, sellers sign all closing documents, collect down payment and settlement charges. Send signed document copy to lender closing department.
If no mistakes (or lender and title company work together to fix the mistakes), lender sends the fund to title company. Loan closed/funded.
Is there a lot work to do for a loan? Yes, a lot work. Based on national mortgage bank association, the cost to originate a loan is about $8887. That represent a lot work.