Stages of a Loan
Your licensed mortgage originator can get you a prequalification letter that says how much house you’re qualified to buy. You’ll probably need to put together some paperwork — two years of tax returns and W-2 forms verifying your employment and income, etc. But it’s an important step, because it will make the whole process easier. Some real estate professionals won’t even show you a home without this letter.
A preapproval goes further than a prequalification and can be an enormous advantage when you’re looking for a home. It means that a mortgage lender has done a thorough examination of your finances, including your income, debts, and assets, and has determined you’re qualified to borrow a certain loan amount at a certain rate. While it’s not an actual guarantee that the lender will approve the loan, it still gives you substantial advantages when you’re shopping for a home.
You have a better idea of what kind of price range you can afford.
You have an enormous advantage over potential buyers who haven’t taken that step, because sellers and real estate agents know you’re likely to be able to make the payment, so they’ll take your offer more seriously.
Your licensed mortgage originator will help you through the application process, much of which consists of gathering and reviewing of documents. Those documents will include:
Recent pay stubs
Recent bank statements
Your lender will provide you with a loan estimate that includes fees and closing costs, including:
Mortgage application fee
Loan origination and document preparation fee
Your licensed mortgage originator will organize all the paperwork and send the information to the processor, who will in turn send all the information to you so you can review it and make sure it’s accurate.
Your processor will begin processing your loan. In a nutshell, he or she will gather everything up in a neat little package to hand off to the underwriter.
While all this is happening, your property will be appraised to safeguard you against spending more on the refinance than it is worth.
Underwriting will verify all the information you provided. The underwriter is responsible for analyzing and validating your income, assets, credit history and the home appraisal. The first thing they will do is compile and review your documentation to see your full financial picture. Next, they will reconstruct your loan scenario to ensure it meets all qualification guidelines and that it is the best loan to fit your financial needs. Finally, your underwriter will take steps to verify your information is accurate and meets the ever-changing mortgage guidelines. You may be asked to provide additional documentation, depending on the requirements of your loan.
Once your loan has been approved, we’ll schedule your closing. This is much simpler than it was when you purchased your home, and the closing had to be done at a title company or attorney’s office. For a refinance, it can be done at your home and will only take a short while for you to sign some paperwork.