The Loan Process
In order for you to purchase a home you more than likely will need a home loan. The home loan process can be scary. But, knowing the process will be an in important part in making your home ownership dream come true.
Step 1 – The loan Process
The key to the loan process going smoothly is the initial interview. At this time, the lender obtains all pertinent documentation so unnecessary problems and delays may be avoided. The Realtor opens escrow with the title company at this time as well.
One major benefit in the process is when lenders use desktop underwriting programs you have a better chance of closing on the home. The program is designed to make the loan process unbiased. It is suppose to make the homeownership process streamlined and easier. The program is regularly reviewed to make sure that the software is analyzing the proper risks while not taking such factors as race, religion, gender, national origin, marital status, or sexual orientation. If the loan initially does not meet the guidelines, the file and application is submitted to an underwriter for further review. The lender will make the final determination on the loan not the program. The program looks at credit history, delinquent accounts, credit card accounts, pubic records, foreclosures, collections, and inquiries.
Step 2 – Ordering Documentation
Within 24 hours of application, the lender requests a credit report, an appraisal on the new property, verifications of employment and funds to close, mortgage or landlord ratings; a preliminary title report and any other necessary supporting documentation. During this same time, you will be ordering and performing your inspections.
Step 3 – Waiting on Documentation
Within one or two weeks, the lender begins to receive the supporting documentation. As it comes in, the lender checks for any problems that might arise and requests any additional items needed.
Step 4 – Loan Submission
Once all the necessary documents are received, the loan processor assembles the loan package and submits it to the underwriter for approval.
Step 5 – Loan Approval
Loan approval generally takes anywhere from 24 to 72 hours. All parties are notified of the approval and any loan conditions, which must be cleared before the loan can close. The loan approval is the beginning of the closing process.
Step 6 – Documents are Drawn
Within 1 to 3 after the loan approval, the loan documents (including the note and deed of trust) are completed and sent to the title company. The title company must have the closing statement showing all the closing costs and figures to the buyer 3 days prior to closing. Once the Realtor has confirmation of these items, the Realtor will schedule the closing with the title company. The borrowers are told how much money they will need to bring in to close the loan. The closing funds typically must be wired to the title company.
Step 7 – Funding
Once all parties have signed the loan documents, they are returned to the lender who reviews the package. Many times the title company will fax or email these documents at the closing table. Once the lender verifies that all the forms have properly been executed, a check is issued to the title company for the loan. The title company then cuts settles the transaction cutting checks to the sellers, sellers lenders, outstanding liens, as well as the Real Estate Companies. All commissions in Florida are cut to the Real Estate broker not to the agent. At this time, you usually get your keys. Sometimes with bank owned properties, they will request new keys to be cut and you will receive them within 2 business days.
Step 8 – Recording
Upon receipt of the loan funds, the title company will record the legal documents necessary to transfer the title of the property into the name of the buyer. The title company sends out the checks to outstanding creditors. The deed showing ownership is recorded along with the record showing the new loan on the property. Once escrow is closed, you now own your own home.