Financing 101

The Loan Process

Here are the steps involved in purchasing your home.

Know your price level/monthly home payment:

Before you start looking for your new home, it is important to know how much home you can afford. Your income, assets and credit history are the main factors – and it takes very little time to speak with a mortgage professional to determine your price range. This will save you time and your Realtor time; enabling you to focus on homes in your price range and budget. During this process, you will determine the interest rate, costs involved in the home buying process and your monthly payments.

Submit your loan:

Once you have found a home and your purchase offer is accepted by the sellers, it is time to submit your loan to purchase the house. At this time, your loan officer will gather all the necessary financial documents from you (such as W2s, Tax returns and Bank Statements) and secure the exact interest rate and costs involved in buying the home. Click the following link to see the full checklist of documents need for a home loan.

Checklist – Full Documentation (Financing)

Home Inspection/Appraisal:

Shortly after your purchase offer is accepted and the loan is being submitted for financing, your Realtor will order a home inspector to check out the home and report any findings they have before you are fully committed to purchasing the home. If there are no findings that warrant you to cancel your offer, the loan officer will send out an appraiser to validate the market value of the home for the bank, so they feel comfortable loaning you money for the property.

Loan Approval:

Once the appraisal is received by the bank, and all your financials are validated, the bank will offer a loan approval. This guarantees that the bank will loan you the money to purchase the home, and they will do so on or before the scheduled closing date (as agreed upon in your purchase agreement).

Close the loan:

On your closing day, you will meet at a Title/Escrow office to sign the final loan paperwork and take ownership of your new home. The Escrow officer is a 3rd party agent who explains the loan paperwork to you on behalf of the bank and notarizes the documents. Your loan officer will attend as well to answer any questions you may have and help you through the process.

Move in!

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Turn in Documentation [your involvement is crucial]

This is the step in which we collect all of your income/asset documentation and can prepare your loan for submission to the loan processor. Note: must complete before moving on to next steps.

2 Days

Preparation for Underwriting

This step involves the Loan Processor reviewing the information we submitted and confirming that it is ready for our the loan underwriter to analyze for loan approval.

5 Days

Conditional Loan Approval

This step involves the loan underwriter analyzing your loan, verifying all the information we submitted to support your income, assets and credit as well as reviewing the home appraisal to validate the market value of the home you are purchasing. The underwriter will inevitably have questions requiring additional documentation. This is often requested to simply reassure the lender that your loan is a good investment for them.

5 Days

Provide Requested Documentation [your involvement is crucial]

The loan processor will be contacting you with the additional items requested from the bank. Once your loan officer has collected any additional documentation requested of you, they will turn them in to the underwriter for final review.

1 Day

Prepared for Underwriting Review

The underwriter reviews the conditions the loan officer turned in to determine if all the questions have been answered adequately.

2 Days

Final Approval

The final analysis is completed by the underwriter and the loan is in Final Approve status. No more conditions are required. The underwriter releases the loan to the document drawing department.

3 Days

Drafting Final Loan Docs

The final loan paperwork is drafted and sent in to the escrow officer along with lender instructions which tell the escrow officer how to prepare for the closing appointment.

1 Day

Schedule & Attend Closing Appointment [your involvement is crucial]

This step involves setting up the appointment for your signing appointment, also called the closing. Your loan officer and Realtor will attend this with you to explain all the documentation you will sign.

1 Day

Loan Funding

This is the final step! The funds from the lender are released, the seller is compensated and the county records you as the new owner. You will receive keys to the property late in the afternoon on this day and the home is all yours!

Information provided by Mike Popnoe @ Strategy7 Financial

1 Day