| 1. |
|
Pre-approval - Get
pre-approved for a mortgage and know in advance exactly
how much house you can afford. Completing this step will
also increase your negotiating power since you'll be
viewed as a "cash buyer". |
|
| 2. |
|
Loan Search -
Put yourself in the hands of an experienced mortgage
professional, someone who will help you to determine
which financing options best suit your needs today
and in the future. |
|
| 3. |
|
Loan Application
- It's crucial to 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
- Paperwork supporting the
application must also be submitted. 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 -
Begin shopping for a house. Once you find the right one,
the terms of the sale will be negotiated, including the
price and potentially the 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 -
All pertinent information will be packaged by your
mortgage professional and sent 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 the loan
professional, the underwriter makes the final decision
regarding whether 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 will send a wire or check for
the amount of the loan to the title company. |
|
| 16. |
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Confirmation of Funding -
The lender authorizes the disbursement of loan proceeds. |
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| 17. |
|
Closing -
Documents transferring title will now be officially
recorded by the County Recorder. |
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| 18. |
|
Congratulations, you are now a
homeowner! |
