There is a lot involved in getting a loan for your purchase. There are a number of different steps along the way, and our simple loan timelines can help you understand the process and be prepared.
APPLY FOR A LOAN
When you apply for a loan, your lender will thoroughly review your financial profile, which includes your assets, income, credit and the type of property you intend to buy. You’ll discuss financing options and determine what loan is best suited for your situation.
OBTAIN A PRE-APPROVAL
Once you have provided all supporting documentation, such as tax returns, W2’s, asset information, etc, and your loan application is complete, your file will be assessed for “Pre-Approval”. Your lender should also provide you with a list of “Do’s and Don’ts” during this stage of the financing process.
IDENTIFY A PROPERTY TO YOUR LENDER
Once we’ve found a property that you want to make an offer on, we’ll let your lender know, and they can run the numbers for you on that particular property, taking into account property taxes, purchase price, etc. Then, once your offer has been accepted, we’ll provide them with a full copy of the sale agreement, and introduce them to the title company who will help facilitate closing.
PROVIDE ADDITIONAL INFORMATION TO LENDER
During your home inspection period, the lender may have additional requests for documentation from you, as they continue to process the file. Typically during this time they will also receive the Preliminary Title Report from the Title Company and review it for any title defects or issues.
Once the home inspection period is over and we have successfully negotiated any repairs or decided to proceed with the purchase as is, we will let the lender know that they can order the appraisal. It is important to wait until after the inspection period and any negotiations are complete before doing this, as sometimes the purchase price can change during this period. It is also good not to incur the additional cost of an appraisal until you know for sure that you are moving forward with the purchase. Depending on the condition of the property, it is possible that the appraiser may require certain things to be completed for the appraisal to be considered valid (these are called conditions).
FINAL LOAN APPROVAL
Once the appraisal is completed, and has been reviewed and approved by the lender, the file will typically go into “Final Underwriting”. If you have been diligent about providing documentation throughout the process, the lender may not need anything additional from you. However, it is common for there to be final requests for documentation or explanation (of things like account deposits, etc). Once the underwriter is satisfied with the file and any conditions (such as repairs) have been removed, they will give Final Loan Approval.
Once Final Loan Approval has been given, the lender will begin to prepare your loan documents, and then they will be sent to the Title Company. The Title Company will notify us that your loan documents have arrived, and it usually takes a day or so for them to be ready to sign, as the Title Company has a number of documents to prepare as well. Once everything is in order, they will send us a statement that shows the final balance due from you at closing, and we can arrange a time for you to sign and bring in your funds. Sometimes we are able to set up signing appointments in advance.
FUNDING AND RECORDING
Once you have signed your loan documents, the Title Company rushes them back to the lender, and one final review is made for clerical errors, etc. Your lender may also perform a final Verification of Employment at this time to make sure nothing has changed. Once everything is in order, the lender will order the transfer of the funds to the Title Company. This usually happens 1-2 days after signing, and is called “Funding”. Once the funds have been received by the Title Company, they will release the file for recording with the County, and within a few hours will have recording confirmation. Once that is received, the purchase is complete and the home is yours!
We have a great list of lenders with whom we often work with. We love their dedication to client service, how they work with our team, and the results they produce for our buyers. You are not limited by any means to these lenders. Ask friends for referrals, but we recommend that you don’t ever use a lender that’s not on our list who can’t give you several recent references who loved the service the lender provided.