Loan Process

The first step in obtaining a loan is to determine how much money you can borrow or what payment level you are comfortable with. The application and credit report will help us determine what type of programs are available to you based on your income and credit scores and debt payments. You will help us understand what you are comfortable spending.

In this market, the realtor will require that you get pre-approved by submitting an online application before you start looking for your new house...so you: 

1. 1. Look for properties within your range.
2. 2. Are in a better position when negotiating with the seller because you will have a pre-approval letter from me.
3. 3. Close your loan more quickly if that is helpful/required.
4. 4. Increases chances of winning the home with a strong offer.

More on Pre-Qualification
     Loan To Value and Debt-to-Income Ratios
     FICO™ Credit Score
     Self Employed Borrower
     Source of down payment

LTV and Debt-to-Income Ratios
LTV or Loan-To-Value ratio is the maximum amount of exposure that a lender is willing to accept in financing your purchase. Lenders are usually prepared to lend a higher percentage of the value, even up to 100%, to creditworthy borrowers. Another consideration in approving the maximum amount of loan for a particular borrower is the ratio of monthly debt payments (such as auto and personal loans) to income. Rule of thumb states that your monthly mortgage payments should not exceed 1/3 of your gross monthly income (this is desirable, but we can normally get you approved up to 50% of your gross income. This 50% includes all of your debt payments. FHA will allow you to go above 50% Debt to Income ratios in some scenarios.

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FICO™ Credit Score
We only pull your credit once and we can use that report for nearly all the lenders we work with. Pulling your scores only once is great for all people but it especially important for lower scores. Some Brokers need to pull your scores from each lender they work with, and this excessive number of credit pulls can lower your scores below an acceptable cutoff level which might cost money in the rate and or disqualify your file.

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Self Employed Borrowers
Self-employed individuals usually need two years of tax returns to determine the income level. In some cases, we can approve you will only one full year. I will submit your file to underwriting for an accurate calculation we can trust.

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Source of Down Payment
Based on the total amount you want to spend out-of-pocket for this transaction, I will determine the best loan program and options for down payment assistance programs. "Gift funds” from an acceptable donor with a signed letter stating that the gifted funds do not have to be paid back is also acceptable in many cases.

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Want to save a ton of time? Just apply online and I will give you a video specific to your file showing you the best options available. 

1) Fixed Rate Mortgage

The vast majority of applicants will go with a fixed rate loan option because it is safest. In the past, sometimes an Adjustable-Rate Mortgage (ARM) offered a lower rate, but it rarely does today.

2) Adjustable Rate Mortgage

We have them available to price, but it rarely makes sense in the current market environment.

Although lenders conform to standards set by government agencies, loan approval guidelines vary depending on the terms of each loan. In general, approval is based on your ability and willingness to repay the loan based on your income and credit scores, and the value of the property.

Once your loan application has been received, we will start the loan approval process immediately. Your loan processor will verify all of the information you have given. If any discrepancies are found, either the processor or your loan officer will troubleshoot to straighten them out.  This information includes:

Income/Employment Check

Is your income sufficient to cover monthly payments?  Industry guidelines are used to evaluate your income and your debts.

 

Credit Check

What is your ability to repay debts when due?  Your credit report is reviewed to determine the type and terms of previous loans. Any lapses or delays in payment are considered and must be explained.

 

Asset Evaluation

Do you have the funds necessary to make the down payment and pay closing costs? We can add down payment assistance to help you in most cases.

 

Property Appraisal

Is there sufficient value in the property? The property is appraised to determine market value. Location and zoning play a part in the evaluation.

 

Other Documentation

In some cases, additional documentation might be required before making a final determination regarding your loan approval. In most cases, I will ask you for the initial documents to get you pre-approved. Next, the processor will review the file and request any documents that they feel are missing. The Underwriter is the next level up, and they may have additional or require additional documentation. 

In order to improve your chances of getting a loan approval:

1. 1. Fill out your loan application completely. You may use our online forms to expedite the process.
2. 2. Respond promptly to any requests for additional documentation especially if you are within 2 weeks of your closing date.
3. 3. Do not move money into or from your bank accounts without a paper trail. If you are receiving money from friends, family or other relatives, we may need a gift letter and sourcing documentation.
4. 4. Do not make any major purchases until your loan is closed.  Purchases cause your debts to increase and might have an adverse effect on your current approval if your debt-to-income ratio is tight.
5. 5. Do not go out of town around your loan's closing date because we need updated documents. If you plan to be out of town for the closing; you will need to sign a Power of Attorney ahead of time.

The important information in the loan gets perfected as the file goes through our process. We will send you some of the final documents ahead of the closing for you to sign electronically. This is called an initial closing disclosure and will likely be fairly, but not completely accurate.

Once the initial closing disclosure is signed, the closing department and the title company will get you final numbers for the actual closing. They will then issue a final closing disclosure that will require you to electronically sign some documents ahead of the closing and some in-person at the closing. These will be final numbers, and you will be able to get a cashier's check for this amount (Bottom of 1st Page).

Personal checks are normally not accepted but if the amount you are bringing is less than $2,000, the title company rules might allow this. 

On owner occupied refinance loan transactions, federal law requires that you have 3 days to review the documents before your loan transaction can fund.