Once we have had a general discussion and determined your needs, please start the process by completing step #1 below.
Step 1 – Documentation
- Gather everything from the list on the Loan Application Process page and have it ready for uploading to a secure Sharefile per my instructions.
- Fill out the online application through the Apply Now link.
- Be prepared for my call to collect payment over the phone for a credit report for all borrowers.
Step 2 – Conditional Approval
- It will be analyzed by myself and processing to prepare for an automated underwriting software pre-approval. If the information provided is correct and no guidelines have changed, it will create a preliminary conditional approval for the human underwriter to go off of once we get to that stage. This computer approval is often needed prior to signing around a final offer for a purchase. When doing a refinance, it’s helpful to determine what things the lender will allow and what other items will be needed. The conditional approval sometimes gives additional instruction that will be needed.
- The human underwriter will add or subtract conditions once they see the file. (Generally add, and that’s why we give them what we give them…we don’t want to do something that will trigger the need for more things) The human underwriter doesn’t see the file until we have (purchase and sale if a purchase) title, appraisal, and any other conditions from the DU automated system. (The efficiency is to have the computer do as much work as possible and the human the least but be the quality control, to reduce costs.)
- Once the human underwritten conditional approval is issued, we need to get exactly what they ask for. In some cases that’s impossible so I will work with you on what’s ok to substitute. Also, time is of the essence because if you take a day to get it to me…the underwriter may put it back in line behind all the files and won’t see it again for several more days. It’s on a first come first serve basis…some days they get 5 new files and some days 105! This is what causes the time line issue of how many hours in underwriting.
Step 3 – Loan Documents
- There could be a lot of back and forth at this stage while underwriting signs off on a number of things from each department so be available by phone, text, etc. for the next steps leading to your loan documents going over to escrow.
- One of those things will be contingency removal on purchases. I will go into more detail with you on this if it applies.
- The interest rate lock- In the days of old, we locked when rates were good and we could predict a timeline for closing. There is a lot more pressure on banks to deliver the loans now so most have a policy of not allowing locks until we are past this stage of the loan approval process and are just about ready to issue documents. I will be carefully watching rates and keep you up to speed on when that will occur. If we have time in the purchase and sale to wait for rate improvement then we can but it’s not recommended. On refinances we have more control. Once this part is done…then the clock is running so we have go to hurry or it will cost you money…in rate or fee, possibly both if the lock expires.
Step 4 – Escrow
At this stage, we are signing and then waiting for funding. I have very little control during this stage, and we have to wait for the folks in the process to do their part of the job.
- Escrow gets the documents from the lender…the last step in the closing process. You will get an email that needs to be acknowledged just when the lender is preparing the final documents to escrow to be aware, watching email, and close to your phone.
- Escrow will call and schedule your appointment for signing. Often within hours of getting the documents but ideal a day before. You will have time to review your HUD settlement statement and have 3 day right of recession on owner-occupied refinances. On purchases, not so much because everyone is usually pushing for an early close. Things are done last minute and in a rush…like herding cats!
- Signing- This is almost the last step. Once you have signed at escrow, be available by phone or email incase a page or two is missing a signature which is often the case, or the pre-funding auditor needs something else….that day and the next day or two until it funds. (officially closes) SIGNING AND FUNDING ARE DIFFERENT DAYS…MEANING YOU CLOSE A DAY OR SO AFTER YOU SIGN.
- You may do your wire transfer for your funds to close the day of or after signing but be aware that your bank will need days for the funds to arrive; some take 3, some take 1. Call ahead and find out.
- The funding wire cut-off time for the new loan is usually sometime between 11:00 a.m. to 3:00 p.m., depending on the lender. The old loan is paid at funding, and all loan funds are disbursed per the escrow instructions of whom to pay. Then the final step is the county recorder will record the new lien holder. They usually do this close to 5:00 p.m. the same day. The loan is essentially complete at the funding step, but some real estate agents get nervous and won’t give keys over until recording.
- Recording is also the magic time when you’re officially the new homeowner (or your refinance is complete) and your insurance goes into effect. Congratulations!
- You’ll want to locate the letter from the lender with instructions for the first payment. The coupon book or statements may come in 6-8 weeks after the loan closes unless you set up an automatic payment.