Welcome Letter, Checklist for Loan Application, and Detail of the Process Guide
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My Commitment to you – First of all, thank you for applying for a loan with me. I look forward to helping you even if it means we do not do a loan now because it doesn’t improve your financial position at this time. As you know, there are many changes being implemented to improve the volatile lending industry. My commitment to you is to improve your current situation. That means if for some reason the loans available don’t do this, then we’ll wait until something is available that does improve your situation.
PLEASE READ ALL PAGES OF THIS FOR MAXIMUM SERVICE AND UNDERSTANDING.
What you can expect, answers to most questions, the item’s to be aware of…
1.) This master list WILL be added to as we go along the process, several departments so thank you for being ready to provide items and sign forms at the time they are requested. I’ll help you get most of it upfront.
2.) On page 2 of this checklist: Items #1, #4, and #5 are recurring, meaning you get new ones weekly or monthly so I will need your most current one including ALL pages so please plan to send them to me regularly, until the loan has closed.
3.) In any transaction from refinance to purchase, there are from 30-60 people involved in the process to complete and close the loan/sale. No matter the years of experience or number of transactions closed, there can and will be unexpected delays beyond our control. Thank you for being understanding and flexible, should we have any type of unforeseeable delay. I apologize in advance for redundancy, etc.,it is part of the process. Lenders do have reasons for all the things they ask for. I also thank you in advance for your patience while we work together on your file. (AND Keep in mind, one day delay on your end can trigger one week delay at the lender. Files come in on a first-serve-first basis so if yours gets to the underwriter’s desk and is missing something, it goes to the end of the line again.) (SEE BOOK for details)
4.) Credit – We will need to pull your credit report at the beginning of the loan application to determine the program and pricing. Even if you have one or know your score, to be compliant we need to order one through an approved service provider that is specifically for the mortgage loan process. When you are using your credit, having a mortgage lender pull a credit report and shopping within a 30-day window is not going to harm your score. Numerous credit report pulls over a several-month window of time, even if you don’t do a new loan, can signal to the others there was some problem and that is what could lower your score. Call me directly to arrange payment for the report. You will immediately get a copy for your records. Because the Credit Bureaus, servicers, and title sells your information- expect to get a flood of calls and emails trying to solicit business from you. My apologies for this. We do not sell your information but the change in the industry means you will be getting hounded so stay alert and in close contact with me so you know who the approved vendors are that we are using. The Fee is $28.00+ for each person, and up from there if work needs to be done on it to improve the score or fix errors.
5.) Application – Once I and my team have received all of the items on the list on page 2 that apply to you, I will be able to help you complete your loan application and shop several lenders on your behalf for the best-priced loan rates and products to meet your needs. Once you are happy with a particular loan, I can e-mail (or mail if necessary) your loan application package for you to sign and return for the DU or formal manual underwritten loan approval. MOST LENDERS NOW USE DOC-U-SIGN software, and they are date sensitive so plan accordingly. There will be several times this is used during the process, especially if we re-broker the file (change lenders on your behalf). Because of the ability to broker and change lenders if there are any problems, there also may be slight changes to the: loan amount, pricing, terms, etc. so stay in close contact with us so you understand which loan we are pursuing you.
6.) After the loan approval is issued, the lender will send you directly a notice of disclosure via mail or usually email DOC-U-SIGN so be in communication with us on who that will be. You will need to respond that you have received them from the lender as a dual disclosure measure, within usually 2 days of receipt.
7.) Then after the lender orders it, the appraiser will be selected and contact you/your agent to schedule the appraisal inspection. You will be charged at the time it is ordered, check with processing on the exact amount. They vary from state to state, area to area, and the nature of the property; condo, 4-unit, SFR, waterfront, etc. Most are now upwards of $600 to start. Decades went by, and appraisers hadn’t increased their fees so after 2008 things drastically changed on that end. Continued on pages 3 and 4….
8.) “Time is of the essence” in the real estate contract means you and the other party to the contract do your best to meet the timelines…lenders are exempt. Meaning: do your best but it may be out of your hands- less loss of earnest money…
Loan Application Process and Checklist
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Items needed for the loan process:
These items are typical for most lenders for most types of loan transactions, purchase, or refinance. Please review all and send what applies to your situation. Ask me if you aren’t sure of something. Depending on the computer-generated loan approval, some items may be added or omitted. Final approval is subject to manual verification by a human underwriter after the property is identified and under contract unless it’s a refinance. Please provide the following ALL PAGES of the items so that I may better help you qualify for the best program to fit your personal needs. The more complete the file, the faster and often cheaper! Apply online today with Coastal Capital Funding at: http://gocoastalcapital.com/ “Apply Now”, create an account, then do LONG FORM. For married clients please use the same application.
SCAN E-Mail or FAX to me (949)340-8012 Best method Basecamp- I will set you up and email you…
1) The most current full-month pay-stubs for each borrower, showing year-to-date earnings- Include December 31st if you do not yet have your prior year W2 or 1099. Please send these automatically every time you get a new one…
2) Last 2 years W2’s or 1099 for each employer; from each borrower (please give dates at each job if more than 1)
3) Last 2 years’ income tax returns, include all schedules (or year-end pay stubs for the prior year if the return not filed) Please SIGN PAGE 2 of the return!
4) Most current 3 months, consecutive bank statements (please include all pages even if last one is blank…lenders auditor will hold up funding on this)
5) Most current 1month or quarterly (or if annual) statement for all retirement & investment accounts; ex: IRA, 401K (all pages on this also please, again auditors will hold up closing if all pages are not there.)
6) Name, address, agent and phone # for Insurance Company you plan to use, for binder. If needed have referral.
7) Payment for that appraisal is due at the time it is ordered and paid via credit/debit card. We can collect payment information at the time of application if you are comfortable. Then it will be applied as a credit to your loan closing costs. Costs start at $650-$850, if Jumbo, multi-unit or commercial much higher,$650 being the average sfr. The lender will select the appraiser as of 4/27/09; we no longer have any contact with appraisers.
8) Per the US Patriot. Act. As of 10/03, 2 pieces of ID are mandatory for each borrower. Common: driver’s license and passport.
9) If doing are a refinance, stand alone 2nd, or FHA Streamline we need a copy of the existing “Promissory NOTE” from the package that you got at escrow when you closed on the purchase or most recent refinance of the first mortgage in order to calculate the streamline and verify benefit to you before applying for the loan.
10) Original Certificate of Eligibility AND DD-214 on VA loans. Also let me know if you are exempt from funding fee.
Other items if applicable: Please review
1) Last 2 years Corporate/ Partnership Tax Returns (all schedules, and all pages)
2) Year-to-date Profit & Loss and Balance Sheet (through most recent quarter)
3) If you are applying for a commercial loan – also a financial statement
4) Business License if self-employed – at some point 3rd party verification may be required such as letter from CPA.
5) Rental Agreements and rent rolls for all rental properties – lending guidelines require 6 months reserves for each rental.
6) Divorce Decree, to document debt owed or to show that it is not owed, or to document income that is received from child support, only if you wish to reveal the income received to be considered as a basis for repaying the loan. Complete copy of the Divorce Decree and any Parenting Plan will be required.
7) Condo/PUD: name, address and phone # of contact person for the Home Owners Association.
8) Bankruptcy documents if filed in the past 7 years. (Includes CH 7, 11, 13.) Please include all pages.
9) If credit issues please write a page or less explanation letter for any and all credit issues and reason. (Ex: divorce, medical, etc.) I will help you go over it before submitting to underwriting. Reason, Remorse, Response – formula.
10) If you are applying for a construction loan, more detailed information will be needed about the builder at a later date. You can expect to provide a description of materials, contractors cost breakdown and builder resume. Depending on the lender, it will more than likely need to be completed on their forms.
11) SHORT SALE- If you are buying a short sale or REO, there may be additional items required, including filling out several forms with mainly the same information for the lender who is currently the lien holder in addition to your new lender that we will be getting your new loan with. These can take from 3-12 months to close depending on liens.
Thank you again for your cooperation. I apologize in advance for redundancy, etc. it is part of the process. Lenders do have reasons for all the things they ask for. I also thank you in advance for your patience while we work together on your file. Please see my book, https://mortgageloan.wpengine.com/ for more thorough explanations.
Loan Application and Closing Process
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Application – Pre-Approval- Processing – Closing
Things to be aware of as we get started:
INTEREST RATES AND FEES: Everything is subject to change at the lenders discretion although we will do our best to stay as close to the original LE (loan estimate, days of old Good Faith Estimate GFE) as possible. Another GOOD change in the industry is we have to over quote the cost and rate within but not under a certain margin…meaning you should be getting better than the quote if all goes well and we can catch a good rate dip to lock in. No one in the industry can under quote what they can’t lock in that day. Locks are also not generally approved to be locked by the lender in most cases until your loan has been formally approved and is past certain points in the closing process.
AS A BROKER: we may switch lenders for you if we get a decline or counteroffer from the original…or if we can find a better loan for you. This will cause slight changes in the pricing and possibly terms. Your most recent LE (Loan Estimate) disclosures are the one we would be going off of so be aware as things change.
RATE LOCK AND TIME DELAYS: There are several things going on at the same time with each loan. There are anywhere form 30-60 people involved in closing your loan when you take into account the title company, appraisers, underwriter, escrow, (realtors, buyers, sellers, tenants in some cases), all the way down to the courier and clerk at the county recording final numbers. There are several steps we just have to wait for and be ready to do our part when called on. I day delay on your end could cause a week at the lender…and your lock! I will assist you as we get to each step and make the requests needed at that time. I will outline a general workflow here that you can follow along with. Once we have had a general discussion and I’ve determined your needs, please start the process by completing step #1 below.
1) What I will need you to do first.
a. Fill out online application – http://gocoastalcapital.com/ go to apply now at top. (Steve Berger Broker)
PLEASE put cell # in home phone spot so escrow doesn’t call your house while you are at work!
b. Be ready for my call to collect payment over the phone for credit report of $27-55 depending on borrowers. There may be additional charges from the credit reporting company depending on work involved. Sign and return credit authorization form. (Credit card info to pay fee can be given via phone verses written)
c. Provide everything from the list on page 2 and upload to drop box or email me per my instructions
2) What happens with your loan file next – conditional approval by computer then later formal by human.
a. 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 preapproval 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.
b. 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.) This is where most folks in the process for weeks are baffled that the lender is asking for something last minute…they are NOT, this is usually the first time the human underwriter has seen it, near the end. Or when an auditor goes over it just prior to documents going to escrow.
c. 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, if you take 1 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
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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.
3) Getting ready for loan documents –
a. 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. This will include TIME SENSITIVE LOAN DISCLOSURES VIA EMAIL.
b. One of those things will be contingency removal on purchases. I will go into more detail with you on this if it applies. Feel free to see Real Estate Notes page or https://mortgageloan.wpengine.com/
c. The interest rate lock- 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 loan approval with conditions in and are just about ready to issue documents. This prevents them doing work for nothing, when the client keeps rate hopping. Much more efficient. We 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 due to compliance with the contract and risk of rates going up. 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. This means be available daily to provide necessary items and avoid delays.
4) G. DO NOT SCHEDULE YOUR MOVING TRUCK UNTIL YOU AND I SPEAK!
a. There are a lot of moving parts here so know the moving company policy on rescheduling.
5) Escrow- signing and then waiting for funding. At this stage, I have very little control and we have to wait for the folks in the process to do their part of the job. BE AVAILABLE DAILY IS KEY
a. Escrow gets the documents from the lender -the last step in the closing process. You will get an emailed Loan Disclosure 3 days prior to signing that needs to be acknowledged that day (usually, maybe 2 days) just when the lender is preparing the final documents to go over to escrow so be aware, watching email, and close to your phone. IF these expire, they have to reissue, causing more delays.
b. Escrow will call and schedule your appointment for signing often within hours of getting the documents but ideally the 3 days prior. 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!
c. Signing- This is almost the last step. Once you have signed at escrow, be available by phone or email in case a page or two is missing a signature which is often the case, or something else is needed by the pre-funding auditor….that day and the next day or two until it funds. (officially closes) SIGNING & FUNDING ARE DIFFERENT DAYS MEANING YOU CLOSE A DAY OR SO AFTER YOU SIGN.
d. 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.
e. The funding wire cut-off time for the new loan is usually sometime between 11:00 a.m. to 3:00 pm depending on the lender. At funding, the old loan is paid, all loan funds are disbursed per the escrow instructions of who 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 most real estate agents get nervous and won’t give keys over until recording because insurance has to be in effect, and that does not happen until funding. The 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!
f. You’ll want to locate the letter from the lender with instructions for first payment. The coupon book or statements may come in 6-8 weeks after the loan closes unless you set up an automatic payment.
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Please help me make the process better. I appreciate your input to this guide and your experience.
You made it! Just think…you do this once in a 5 or 10-year time window….I do it all day long every day. :} And I love helping you make your dreams come true. I apologize if I over or under-explain things. I’ve been in the lending industry since 1990 now so it’s pretty automatic for me. I will do my best to absorb most of the stress and aggravation so you don’t have to. My team and I will keep you up to date on what you need to know and when you need to know… so we aren’t going in circles.
Something to share with you – Most loan originators you run across are not also real estate brokers, much less authors of a book about the industry. Most real estate agents are not loan originators and do not know everything about both sides. I have written a book on the mortgage loan process in hopes to improve expectations and make things go easier for all involved. In addition to these 3 things, I have additional licensing and experience that can help you with other matters of concern. I have an elaborate team across the west coast that is able to assist where needed. Exceptional resources, far above and beyond the typical, is what you have with my service.
Thank you again and I look forward to staying in touch with you throughout the next several years. I’m always just a call, text or email away and I love hearing from you, even just to say hi and catch up. Thank you also for your referrals. I pride myself on being available to you at all hours of the day or night while you are going through this rigorous process so I spend less time with strangers and more time with those of you that I care about. If you run across a friend, family member, co-worker, group member and you feel that I have earned the right to ask for their business, I will be happy to help them too. Feel free to call me about their situation, or when they are ready they can call me. Thank you again, and I look forward to working with you and those you care about.
Thank you again! Stay in touch!
Visit my blog at https://mortgageloan.wpengine.com/
The Mortgage Loan Process – Adrean J Rudie
Adrean J. Rudie
WA #MLO-73945 WA Lic/Cert #1131