Pre-Approval, also known as “pre-qualified” means that the loan officer has reviewed your loan application, pulled your credit, ran your file through an automated underwriting system, often reviewed income documents and determined that the underwriter will approve your loan. In most cases an underwriter has not reviewed the file, the “pre-approval” is based on the loan officer’s interpretation and understanding of the loan guidelines and his/her review of some items you may have provided. The approval letter is only as good as the loan officer issuing the approval letter. Fortunately, you are in good hands and we are extremely thorough with our approval letters.
You have an accepted offer! Now What? Understand that the average transaction according to Ellie Mae, the mortgage software giant, takes 45 days from the day you start the loan process to the day you get the keys. You made a great choice in allowing us to secure your home loan, we average this process in 25 days. With your help we will get you to the finish line with time to spare.
Step 1: Choosing your program and interest rate (usually within 24 hours of your accepted offer): Your first conversation will be with the Loan Officer to discuss the program you have chosen, the estimated costs, the interest rate, the monthly payment and your expected cash required to close.
Step 2: Preparing your file for Underwriting: Within 24 hours the Loan Officer Assistant Set-up Specialist (LOASS- pronounce it how you like J) will reach out to you to with your loan disclosures as well as a needs list. The LOASS’s job is to prepare the file for the underwriter. The LOASS will be able to order your appraisal as soon as you sign your loan disclosures and provide her with credit card information. Our LOASS is Linnea, or sometimes Courtney.
Please note you may have given documents to your loan officer at time of pre-approval. The LOASS will review those documents and use them as part of the package being prepared for underwriting if the items are not expired and they are in the proper format. This list of documents will be more thorough than the list the loan officer asked you for. The list the loan officer asked you for was for the purposes of insuring that the loan will be approved when it goes to underwriting. Now that you are under contract, the package going to the underwriter will be more comprehensive.
Please also note that once you provide the LOASS with what she asks for, she will review the items, and possibly ask for more items based on the items you submitted. It is very common for an item to breed the need for another item. A great example is the LOASS will ask you for a bank statement, if on the bank statement there is a deposit that isn’t from your employer, she will ask for an explanation and you may even need to provide documentation documenting the deposit. Often a buyer may ask…”Why didn’t you ask for that upfront”? Well, in most instances, the LOASS wouldn’t have known to ask for something until she sees the initial list of items. So work closely with the LOASS in the first week. Most of the “heavy lifting” is done during this time. (This process on average takes 1 week but your appraisal is usually ordered in 48 hours)
Step 3: Conditional Loan Approval!: By around Day 13 your appraisal will be in and forwarded to you and we will have loan approval. You will now be contacted by our Loan Officer Assistant Closing Specialist (LOACS), usually Michelle and in some cases Courtney. We hope that you may only have 1-3 items to get to the LOACS so she can submit back to underwriting for final approval. Occasionally this list could be more extensive, it just depends on the complexity of your file.
Within a few days of getting loan approval, you will receive a Closing Disclosure, or “CD”. Please note*, your cash required to close is still just an estimate and often a little higher than what your loan officer prepared you for. You will need to e-sign the document. You cannot sign final loan documents and close until 3 days after you sign your CD.
Please Note we cannot send out the CD until we have all three of the following: Loan approval, appraisal, and your home owner’s insurance quote.
STEP 4: Final Loan Approval! (AKA Clear to Close): By around Day 21 you should have final approval. Your file will then move to our closing department where our closer will draft up the final documents for you to sign. Once your loan documents go to title, you will have the exact number of the remaining funds you need to bring to close.
STEP 5- Signing, Funding and Recording! If you are signing before noon, and you have wired the necessary funds required to close, then you should be able to sign, fund and record all in the same day. In most cases, the notification of recording is when the seller will release the keys. Typically, most recording notifications occur by 5pm. So, if you are scheduling deliveries, make sure to schedule the day after you are recording. If you are signing later in the day, the funding and recording will take place the following day.
I hope this helps you understand the loan process a little better. We will try our best to make this a smooth, predictable and stress-free process for you. We know this will be not only exciting but often stressful. We will do everything we can to make the process as stress-free as possible.