Getting a home loan is indeed a process and a simple application will go through various stages before it finally funds. In the early stages, even before you’ve submitted your application, you speak primarily with your loan officer. Your loan officer will provide various loan options based upon your current situation and your goals. Your loan officer can prequalify you over the phone and give you an idea about how much you can qualify for based upon your information and current market rates. You and I can meet in person or we can have this conversation on the phone. Eventually, your mortgage will be in the loan processing stage.
Pre-Qualifying vs. Pre-Approval
The prequalification stage is the earliest and is the result of our conversation. But we can only take that so far. Today, sellers want to see you take it a step or two further and actually receive a preapproval. A preapproval is an enhanced version of a prequalification and issued after a review of your credit report, paycheck stubs and bank statements, among other items. Upon issuance of a preapproval, you’ll be provided with a letter from me, on my letterhead, stating that you have indeed applied for a mortgage and qualifying documentation has been submitted and verified. At this point, the ball is in your court. You need next to find a home. It’s typically at this stage where you officially advance to the next stage- loan processing.
Loan Processing Stage
While you and I will still be in touch with one another, you’ll be introduced to your Loan Processor. Your loan processor is the individual that puts together your final loan package and prepares it for submitting to the underwriter. The underwriter is the person responsible for making sure your loan file meets all the guidelines for the selected loan program. The processor’s job is getting your loan application to that stage.
You will now be working directly with the loan processor during the loan processing stage. The loan processor will review your file and gather any additional documentation needed. For example, all credit documents within the loan file must be no more than 30 days old. If you’ve been shopping around for a home for a while, it’s very likely the initial documents you provided are expired. When it’s time to send your loan to underwriting, the processor makes sure to get updated documentation to comply with lending guidelines. The same goes for bank statements and similar documentation.
The loan processor will also order various third party documents needed to close your loan. These documents include things like a preliminary title report or an appraisal. Escrow will be opened, and a closing scheduled. Your processor will also contact your insurance agent to get a copy of your new policy with the new lender’s information appearing in the policy. Once the file has been completely documented, it moves to underwriting. But your processor isn’t finished with your loan. Your loan will still be considered “in loan processing.”
The underwriter may have some questions about the file. You won’t be speaking directly with the underwriter, however, to answer questions. Instead, the underwriter lets the processor know what else is needed. Perhaps there was a gap in employment that needs to be explained or a bonus showing up in a bank statement that needs to be documented. Whatever the questions are, it’s the processor who will contact you directly. Once the file has been completely approved and verified, your loan papers are ordered and sent to the settlement agent. Papers are signed and returned to the lender for one more final look. Once the lender determines that all the instructions to the settlement agent have been properly followed, funds are released for the mortgage and the loan closes.