Loan Process

Discover the Steps in Obtaining a Home Loan

•  Prequalification:

The home loan "Prequalification" process occurs before the actual loan process begins.  It is usually during first contact that you and your lender decide upon the loan program best suited for you.  Your lender also gathers personal financial information to help you determine how much home you can afford to buy.  The amount you qualify for may vary depending on the loan program you choose, so you will want to have a prequalification run made for each type program you may consider.

• Application: 

Your lender's job is to understand your particular financial circumstances completely.  You will review all information on the application at your meeting with the loan officer.  A situation rarely arises that your loan officer has not encountered in the past.  Do not hesitate to discuss any questions you have regarding your assets, income, or credit.  By providing complete information, you prevent delays or extra trips to deliver documents.

o   Loan Application Checklist: 

The amount of documentation and information required for a mortgage can seem overwhelming.  You can facilitate the application process by collecting as much of the needed information as you can before your appointment.  Our 'Home Loan Application Checklist'  is a general guide to assist you with the loan application.  Some of the items listed may not apply to you, and your lender will probably request some items that we have not mentioned, but this list will get you off to a good start.

• Loan Processing: 

Loan processing normally occurs during the first 3 weeks after you have contracted to buy a home.  Once you have given all preliminary information to your loan officer, your lender sends verification forms to your employers, banks, and current mortgage company or proprietor, and orders a credit report and appraisal.  You sign a release to authorize these steps.  Your lender will provide you with a Good Faith Estimate and a Truth-in-Lending Disclosure.

o   Good Faith Estimate: 

Estimated costs you will incur at closing are detailed on the Good Faith Estimate.  Some of the numbers listed on this form are prorated, subject to change based on the actual date of the closing.  Others are set fees that should remain the same.

o   Truth-in-Lending Disclosure: 

Shows the total cost to you, over the term of the loan, for your specific financing.  The calculation is based on the assumption that you own the home and make regular payments throughout the term of the loan.

o   Verification of Employment (VOE): 

Verification forms are sent to all of your employers for the last two years.  The employers complete, sign, and return the forms to the lender.  The forms show the dates of employment, the amount of money you earned last year, and how much you have earned so far this year.  The VOE documents bonuses and overtime you earned.

o   Verification of Deposit (VOD): 

Verification forms are sent to each financial institution listed on your application.  The institutions indicate the date you opened each account, average balances for the last three months, and the amount of money you have in each account on the day they complete the form.  Any loans or overdraft accounts you have with the bank will also be shown.

o   Verification of Mortgage (VOM): 

Verification forms are sent to Lenders and Landlords for them to verify how much you owe, the amount of your monthly payment, and whether you make your payments by the due date.

o   Credit Report: 

Your credit report includes your Credit Score  and shows the amounts of money you owe to each of your creditors, minimum monthly payments, and your payment history.

o   Appraisal: 

The appraisal confirms the value of the home you are purchasing.

• Processing Time: 

Typically, several weeks pass as these reports and forms are returned to the lender.  If any delays are encountered, the loan officer may contact you for assistance.  The credit-reporting agency may call you to verify that the information they have gathered is correct.  Once the loan processor has collected this standard documentation, you may be asked to write letters describing your assets, income, or credit.  Few loans are finalized without requests for additional information just before the package is submitted to the underwriter for final approval.  At this point, you may become frustrated with the loan process.  Please remember that your lender requests these letters to assist you in obtaining your financing.  Do not hesitate to discuss your concerns with your loan officer.  Perhaps he or she can provide some additional insight on what may seem to be redundant request.

Before the processor submits your file to the underwriters for final approval, he or she will verify the final sales price.  The Purchase Agreement requires that cost increase change orders be paid in cash to the Builder.  However, if a change occurs prior to final loan approval and you wish to increase the loan amount, make sure copies of all such addenda or change orders signed after the original purchase agreement are sent to the lender.  This assists the lender in determining the exact loan amount.  If change orders affect the total price after this point, you may have to resubmit your loan application for the higher amount or the lender may ask you to pay for the additional items in cash.

• Loan Approval: 

During your first meeting, you and your lender determine the timing to obtain pre-qualification.  You will discuss additional items required to obtain final loan approval.  With our ‘Preferred Lenders’, loan approval usually takes only 10 – 14 days once all required documentation is received by your lender. 

o   Contingencies: 

Loan approvals often carry conditions of approval.  The sale of a previous home or proofs of funds are two examples.  Discuss any concern you may have about such conditions with your loan officer and obtain any requested documentation as soon as possible.  Once all contingencies are met, the final loan can be approved.

o   Loan Lock: 

The only thing anyone knows for certain about interest rates is that they usually change.  Do not rely on anyone's predictions regarding rates.  Locking your rate prematurely can result in extra expense if your new home is not complete in time to close within the lock period.  We are happy to update you throughout the process of construction on the expected delivery date.  Until we reach a point in construction where factors outside our control should no longer affect the delivery date, the decision to lock your loan is at best a gamble.