1. Pre-approval - Getting pre-approved for a mortgage allows
borrowers to know exactly how much house they can afford.
Viewed as "cash buyers", pre-approved borrowers
have greater negotiating power as well.
2. Loan Search - Buyers should seek the advice of an experienced
mortgage professional, someone who will help determine which
financing options best suit their needs today and in the
future.
3. Loan Application - It's crucial that consumers supply
the lender with as much information as possible, as accurately
as possible. All outstanding debts as well as assets and
income should be included.
4. Documentation - Buyers must submit paperwork supporting
the application as well. Information commonly sought includes
pay stubs, two years' tax returns, and account statements
verifying the source of the down payment, funds to close
and reserves.
5. The Hunt - The buyer begins shopping for a house. When
the right one is found, the terms of the sale will be negotiated,
including the price and potential terms of the loan being
sought.
6. Appraisal - Lenders require an appraisal on all home
sales. By knowing the true value of the home, the borrower
is protected from overpaying.
7. Title Search - This is the time when any liens against
the property are discovered. A lien may have been placed
on a property to ensure payment of outstanding debts by
the owner. All liens must be cleared before a transaction
can be completed.
8. Termite Inspection - While most purchase loans do not
require a formal inspection for termite and water damage,
some loans (especially government loans) allow for the possibility.
If problems are found, repairs may be necessary.
9. Processor's Review - The mortgage professional packages
all pertinent information and sends it to the lending underwriter,
including any explanations that may be needed, such as reasons
for derogatory credit.
10. Underwriter's Review - Based on the information put
together by both the loan executive and the processor, the
underwriter makes the final decision regarding whether or
not a loan is approved.
11. Mortgage Insurance - Many lenders require private mortgage
insurance when borrowers put down less than 20 percent on
a loan.
12. Approval, denial or counter offer - In order to approve
a loan, the lender may ask the borrowers to put more money
down to improve the debt-to-income ratio. The borrower may
also need a bigger down payment if the property appraises
for less than the purchase price.
13. Insurance - Lenders require fire and hazard insurance
on the replacement value of the structure. Flood insurance
will also be required if the property is located in a flood
zone. In California, some lenders require earthquake insurance
on condominiums.
14. Signing - During this step, final loan and escrow documents
are signed.
15. Funding - At this point, the lender sends a wire or
check for the amount of the loan to the title company.
16. Confirmation of Recording - The lender authorizes the
disbursements of loan proceeds.
17. Close of Escrow - Documents transferring title will
now be recorded with the County Recorder.
18. Buyer Begins Making Mortgage Payments
(Courtesy of Donna Barker - Countrywide Home
Loans)
www.DonnaBarkerLoans.com
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