 |
 |
|
Everything
You Ever Wanted to Know
About Processing A Loan
But Were Afraid to Ask!
By Bev Cowan
Packaging the Loan
All written information on the loan application must be verified in writing. It is the responsibility and main purpose of the loan officer to gather all the support documentation concerning the loan application and analyze it before submitting the loan to the underwriter. By the time the loan officer has completed the loan application process, she knows the borrowers quite well! It is her wish to introduce the borrowers, via the loan package, to the underwriter so that the underwriter sees the borrowers' strengths and creditworthiness.
It takes about three weeks from the date of application to obtain all written verifications and other support documentation that may be required.
The Credit Report
A three bureau credit report is ordered during the early stages of the loan process. All discrepancies on the credit report should be addressed in writing by the borrowers. These credit explanations will be a part of the loan package.
A borrower does not have to have perfect credit in order to get a loan; however, the most recent two years credit history are reviewed closely by the underwriter.
If the borrower has had a bankruptcy, in most cases, he is still eligible for a loan IF it has been discharged for two years. If there has been a home foreclosure, it must be seasoned for three years before a lender will consider the borrower creditworthy.
The credit report is ordered shortly after the application is taken and is received within three to four days afterwards.
The Appraisal
Once a real estate contract has been accepted, an appraisal is ordered. The appraiser looks at three other homes, similar in size, age and neighborhood, that have recently been sold. (He will then compare each home in detail to the property; consider the condition of the property; and the location of the property to determine the fair market value of the home.) The appraiser then provides the lender with a formal, written appraisal of the property which becomes a part of the loan package.
The appraisal is ordered after a sales contract is signed. It takes two to three weeks to be completed.
Title Search
The escrow company will perform a title search on the property to determine if the seller has clear title to give to the buyer and guarantees that the lender will be in a first lien position (i.e., no other debts before the mortgage). The escrow company makes certain that there is nothing of record that would cause the borrower and/or lender to have an imperfect title.
The title search is ordered after a property is found. It takes about one week to be completed.
Underwriting
THE UNDERWRITER DECIDES WHETHER OR NOT TO APPROVE THE LOAN.
The underwriter looks at three things in order to make her decision:
Your financial ability to repay the loan (i.e., your job stability and income)
Your willingness to repay the loan (i.e., your credit report and house payment history)
The appraised value to determine whether or not the property is worth what you are willing to pay for it.
It takes about three to five days to go through the underwriting process.
This is a hurry up and then wait process. When you think about it, there are at least ten people involved in the loan process: the buyers, the sellers, the buyer's real estate agent, the seller's real estate agent, the loan officer, the loan processor, the underwriter, the appraiser, and the escrow officer. It is the loan officer's job to work with all the people involved in the loan transaction to ensure that the loan process goes along smoothly and that you are able to buy your home.
It
normally takes about 30 days to complete the loan
process. In some cases this process can be shortened to
two or three weeks.
6 Dumbest
Mistakes Smart People Make When Getting a Loan and how to
Avoid Them
First Things
First
Glossary of
Mortgage Terms
Road Blocks
to a Successful Closing
Trilogy Mortgage,
Inc.
1050 E. Southern Avenue, Ste F7
Tempe, AZ 85282
(602) 517-1100
A member of the
Relo-USA
Network. © 1998 All rights
reserved
All trademarks are owned by the respective company or AMC
Internet Consultants
