How you experience buying or refinancing a home will be determined by your choice of a Loan Officer.
That’s right. Getting a mortgage can be a very scary and frustrating process… but it doesn’t have to be.
Mortgage companies are only as good as the people they hire, so choose wisely.
Your loan officer is your connection to: your real estate agent, your title company, the loan processor and the underwriter, as well as other people that perform various roles throughout your loan application stages. If you have a bad communicator, you’ll likely have a bad mortgage experience.
Lots of things can be faked or embellished. For example, lack of experience is often disguised behind a big mortgage company name. But how helpful and how well one communicates will be easy to asses – especially if you have a problem. So develop a problem. Ask questions without the fear of looking silly, or bothering your loan officer. Something simple like this can save you A LOT of headaches in the future.
There are many ways of doing things (and the mortgage industry is no exception), but the steps below will always be present at one point or another. So here is how I do things.
This is what usually happens once you click the Submit button on my very convenient online application:
1. Initial application
I will pull your credit report, and it will always be a hard inquiry. Soft inquiries can only be performed by your current creditors to insure that your credit rating is still in good standing (or they’ll cut your credit limit). If a loan officer ever tells you they’ll do a soft credit pull, they’re either lying or totally clueless. Step away, slowly…no eye contact.
Tip: If you have credit issues and think your credit score might need some work, head over to www.annualcreditreport.com. Get a copy of your report (Equifax preferred) and email it to me for analysis at firstname.lastname@example.org. I’ll walk you through the steps you need to take to improve your score before you even apply.
Once I have your credit report, I will verify that your credit score is sufficient (need at least a 580 for government loans, and 620 for Conventional), and your credit history is acceptable.
If all looks good and it’s a purchase loan, you’ll get a Pre-Qualification letter by email, and a text message letting you know to check your email (this generally takes me about 15 min if I don’t need additional information).
For refinances, I’ll send you a list of additional documents I need, then start your loan submission and registration. This also applies to new purchases if you put my Pre-Qualification Letter to good use and get the offer on your dream home accepted (Yay!)
Documents you should put together:
- 2 months worth of pay stubs
- Copies of your prior 2 years tax returns and any W2/1099 forms
- 2 months of bank statements
- Homeowner’s Insurance quote or policy information
- Mortgage statements for any existing mortgages
- Copies of your DL and SS card (for government loans
- Copy of your Purchase Contract signed by all parties and a copy of your earnest money check – if applicable
An initial disclosure package will be emailed to you within 3 business days – it will require your acknowledgement by way of electronic signature. This electronic signature does not legally bind you to anything, but it is required before I can proceed with anything else (such as submitting to underwriting and ordering the appraisal).
A really important document included in this disclosure package is your Loan Estimate (this new form has replaced the Good Faith Estimate that was used in the past). Look over it carefully, and expect an email from me with explanations on it. Again, don’t be afraid to ask questions.
This form is not the most intuitive regulators could have come up with. Fees will usually be estimated high to avoid any compliance issues.
I will walk you through the fees and point out exactly what is estimated high, as well as what doesn’t even apply but needs to be listed regardless (such as the Owner’s Title policy, which is usually paid for by the seller on a Utah purchase).
3. Underwriting Part I
Once you receive my checklist of documents, do your best to gather everything and return everything as soon as possible. The more complete your loan file is going IN, the less conditions we’ll have coming OUT.
Conditions are requests for additional documentation, and the number 1 reason for frustrated borrowers. There are countless loan officers that can’t get their ducks in a row and go in and out of underwriting just to figure out they need more stuff each time!
Underwriting usually takes 1-3 days, depending on how many files were submitted before yours.
If there are any deal breakers on your mortgage loan – this is when they are revealed. Otherwise, expect to receive an easy conditional approval. Most commonly the underwriter will need to see a satisfactory appraisal report, complete and accurate title paperwork, and maybe a letter of explanation from you.
Tip: This is usually the time I consider locking your interest rate in, unless there is a good indication that the market conditions will worsen and rates are moving up – then I lock at the time of the initial disclosures. This is not an option you get with most big mortgage companies and it’s a shame, because good timing can save you quite a bit of money.
4. Ordering the appraisal
I usually wait for the initial underwriting approval before ordering the appraisal, but will order right away and with a rush if we’re on a time crunch.
The cost of an appraisal is usually around the $500 price mark, so it’s not something you want to move forward with unless you have a fairly clean cut application. If I have any concerns regarding your approval, you’ll know it BEFORE I order the appraisal.
Not everyone is as courteous in this matter, so take all the necessary precautions to protect yourself. Even if this means asking your loan officer NOT to order the appraisal until your initial approval is confirmed.
Once the appraisal order is in, it usually takes one or two days for the appraiser to make contact with the seller, or the seller’s agent. The appointment is scheduled, and the final report is usually issued within 5 days of that. Give it about 10 days total until you’ll get a copy of the report – more or less depending on how busy the mortgage industry is.
As a buyer, you do not need to do anything except provide me with the payment information for the appraisal. Each lender will have a list of appraisers that are approved, and one will randomly be assigned to your loan file.
Tip: The only people that get to see the appraisal report are the ones working on your loan, and your agent if you wish to have a copy forwarded to them. The seller will never get a copy unless you want them to – such a situation would apply if the appraisal value came in low and you wanted to negotiate a lower purchase price based on it.
5. Underwriting Part II
By the time the appraisal comes back, you should have your conditional approval, along with any additional required documentation.
If the appraisal is good (value is the same or higher than the purchase price and no repairs are required) your loan will go back into the underwriting queue. Conditions will be reviewed, and a clear to close will be issued if and when all the conditions are signed off on.
6. Closing Disclosure
You might receive a few different Loan Estimates throughout the process. Each time a fee gets adjusted (or when your interest rate is locked in) you should receive an updated copy notifying you of the change. The final Loan Estimate is called the Closing Disclosure, and new regulation demands a 3 days waiting period after it is provided to you.
The Closing Disclosure is your Settlement Statement, and it will have the exact terms and fees you will see at the closing table. The lender and the title company will work together to issue it based on actual invoices rather than the previously used estimates.
Acknowledge it as soon as it is sent out (it will also be an electronic signature), and like before, expect an email from me with all the proper explanations.
You’ll want to make sure the interest rate is what you expected, as well as the cash to close if any. Always ask questions if you feel something is off – mistakes occasionally happen and they’re always easier to fix earlier in the process.
7. Closing documents and signing with title
Once the Closing Disclosure is acknowledged and we have the clear to close, I will order closing documents and schedule a meeting with the title company to sign them. Time to really get excited!
After signing the closing documents, funding will usually happen the next day on purchase loans (same day funding can be an option if on a time crunch). The lender sends the funds to the title company by wire transfer, and the title company disburses the funds and records the title of the property in your name.
This is when most people get the keys from their real estate agents, but check with your agent and your purchase contract to be sure.
In the case of refinance loans, there is an additional 3 business day waiting period after signing closing documents and before your loan is allowed to fund. This is known as the “right of rescission” and should have been removed when the Closing Disclosure waiting period was introduced… but wasn’t.
Note that the right of rescission does not apply if you are refinancing with your existing lender.
Not all mortgage companies work the same way, so you’ll want to ask potential lenders what their timeframe is. 3-4 weeks to close a loan is an acceptable timeframe, but it can be done faster if things are coordinated properly.
If time is of the essence, make sure to ask exactly how that will be achieved and get it in writing – don’t rely on a verbal promise.
I’ve made it my goal to provide a hassle free mortgage process, and I’m proud to say it is a goal I’ve achieved.
If you’re having issues with your current loan officer, you might want to consider contacting me for a second opinion. I’ll either win you over , or put your mind at ease. Some delays are perfectly justified within the mortgage process – not explaining them is just bad business practice. Moving is enough stress in itself.
Please feel free to reach out with any questions to email@example.com or at (801) 473-3154. Email is the best way to reach me, but texts are also encouraged. I am available after hours and on weekends should you need a Pre-Qualification Letter for that home that just got listed
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