Q - How does the loan process work?
A - The loan process can be broken down into 6 simple steps:
- Organize Your Documents
For purchasing or refinancing your home/rental property:
- If you are salaried: provide your last two years W-2's and one month of pay-stubs; if you are self-employed: provide your last two years tax returns and a YTD profit & loss statement.
- If you own rental property, please provide rental agreements.
- To verify assets, please provide 3 months bank statements for each of your checking, savings & investment accounts.
- A copy of bankruptcy discharge papers, if applicable.
- A copy of divorce decree, if applicable.
- If you are NOT a US citizen, please provide us with a copy of your green card (front & back), or if you are NOT a permanent resident, please provide us with a copy of your visa.
- If you're applying for a home equity loan, please provide a copy of your first mortgage note. This will normally be found in your closing loan documents for your first mortgage.
Getting pre-qualified before you apply for a loan can help you understand how much you can borrow. When buying a house, you may get pre-qualified or pre-approved. You can get pre-qualified over the phone or on the Internet in a few minutes. A pre-qualification is not as beneficial as a pre-approval, where you go through a more rigorous process including verification of your credit, income, assets and liabilities. It is highly recommended that you get pre-approved before you start looking for a house. This will help you by:
Compare Loan Programs & Rates
- Finding out the maximum sales price of the house you can buy, so you do not waste time looking for properties you cannot qualify for.
- Putting you in a stronger position when you are negotiating with the seller, because the seller knows that your loan is already approved.
- Allowing you to close quickly, since your loan is already approved.
At the time you apply for a loan, we will discuss with you available mortgage programs & pricing. To make a more informed decision, regarding which program is more beneficial to you. Consider the following things:
Apply for a loan
- Think about how long you plan to keep the loan If you plan to sell the house or refinance in a few years, you may want to consider an adjustable or balloon loan. On the other hand, if you plan to keep the house for a longer time you may want to look at fixed loans. You need to pick the loan program that best fits your lifestyle & future plans.
- Understand the relationship between rates and points: Points (a point equals 1% of the loan amount) are considered to be prepaid interest and are tax deductible. The more points you pay, the lower the rate you will get.
Once you have gathered all your documents & have spoken with us regarding loan programs & pricing options, it is time to apply for the loan. At the time of application, we will present you with a completed loan application & preliminary loan disclosure documentation for your signature, as required by Federal Law.
Obtain Loan Approval
Once your loan application & preliminary loan documents have been signed, we will start the loan approval process immediately. This involves verifying your credit history, employment history, assets (including your bank & investment accounts), and the value of the property in question. Based on your specific situation, additional documents or verifications may be required. To improve your chances of getting a loan approval, be sure you:
Close The Loan
- Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
- Continue to make on-time payments on all credit accounts, even if you plan to pay off credit accounts in a refinance.
- Avoid making credit account purchases. Any credit debt increases may prevent you from being approved.
- Do not move money into your bank accounts unless it can be traced.
- Plan to be in town around the closing date, as you will need to be available for signing documents.
After your loan is fully approved & loan conditions have been met, you will need to sign the final loan documents. This is typically done at an escrow or title company. Be prepared to:
- Bring a cashiers check for your down payment & closing costs (if a purchase). Personal checks are not acceptable.
- Review the final loan documents. Make sure that the interest rate and loan terms are what you thought they were, and that the name and address on the loan documents are accurate.
Your loan will normally fund shortly after you have signed the loan documents. On owner occupied refinance & home equity loan transactions, federal law requires that you have 3 days to review the documents before your loan transaction can fund.