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Understanding the
Mortgage Process
By: mbtopacio
APPLICATION
Before you
purchase a property, you should go to a Loan Officer for a
pre-qualifying. The buyer has the right to choose his/her own Real
Estate Mortgage Lender. Fill out and complete a loan application to
include current employment, assets and liabilities. Submit all
necessary initial documentation such as current pay stubs, two years
W2’s, copy of bank statements. The Loan Officer or Lender shall pull
out a credit report and then pre-qualifies you. Once you are
qualified, the Loan Officer will advise you the maximum Purchase
Price and the Loan Amount that you are qualified for. The Loan
Officer will then provide you and your Real Estate Agent a
pre-approval letter. You, the Buyer now become the Borrower.
OPENING THE FILE and PROCESSING
Once the offer
is accepted, the real estate agent sends the signed copy of the
contract to the lender. The Lender now opens the loan file. A
request goes out for a property appraisal, mail verification of
employment, verification of deposits, verification of rents, and any
other supporting documentation needed.
Documents are
reviewed as they are received. These documents are credit report,
verification of deposits, verification of rents, verification of
income and appraisal. Debt and payment histories are reviewed and
verified. Statement of Information is required for Title Insurance
to eliminate any liens or judgments and Pay-off balances are
determined. After the loan package has been double checked, it is
now submitted to the underwriter for formal approval.
UNDERWRITING
The lender
underwriter reviews the entire loan package. The underwriter now
issues a Mortgage Commitment and Approval. The loan processor
informs the loan agents, Realtors, escrow of the
approval/commitment. The loan officer informs the borrower/s. If
there are some questions or conditions pertaining to the borrower,
it is extremely important that the Borrower/s make immediate
response. Additional documentation may be required at this time.
PRE-CLOSING
All loan
conditions must be submitted prior to loan closing. The lender
prepares closing loan documents and sends it to Title/Escrow
Company. When the papers are ready for signature(s), the closer, in
California, the Escrow Officer, call the borrower/s and advise
him/her/them how much money will be needed to close the loan and
arrange for a meeting to sign the papers.
After signing,
closing is scheduled. Borrower/s orders homeowner insurance to
cover replacement cost or the new loan amount. The escrow will
require the name of the homeowners insurance, phone number and
policy number to show evidence of insurance. The escrow then sends
signed loan documents back to the lender.
CLOSING
The lender
checks the final figures and paperwork (loan documents). The lender
sends the money by wire to the Title Company. The Borrower presents
certified check for balance of down payment and/or closing costs.
The Title
Company then records the deed of trust at the County Recorder’s
Office the following business day. The Title Company, after
receiving confirmation of the recording, will now pay-off any or all
existing deeds of trust and forward the pay-off figures and title
charges to escrow. The escrow officer will then disburse the funds
to the agents, accommodation payoffs, etc..etc.
This officially
ends the closing process with the security for your loan becoming a
matter of public record.
The real estate
agents hand over the key of the property to the borrower, who is now
the new owner. The borrower/s then moves to the new home/property.
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