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The Loan Process
Prequalification is the first step in the loan process. To be pre-qualified for a mortgage loan, we will gather pertinent information from the borrower including income, credit documentation, savings and down payment information. Once we have gathered this information, we can determine the type and amount of the loan that best fits the borrowers needs.
During the process of the pre-qualification, we will look at the borrower’s ability to repay the loan and the borrower’s credit history.
The ability to repay the loan will be verified by looking at the borrower's employment history and current income. Most loan programs will require the borrower to have been in the same line of work for the past two years. There are exceptions to this rule, such as a borrower that has just graduated from college and is working in the same line of work that they received a degree.
The loan program requested will also determine the minimum credit requirement for that loan program. We have many different types of loan programs including first time buyer programs, FHA, VA, conventional and jumbo loans. Each of these loan programs have different underwriting guidelines. We will be able to go over the different programs and decide which program best suits your needs.
We understand that certain circumstances can cause legitimate reasons for credit problems such as medical, unemployment and financial situations. If you have had credit problems in the past, be prepared to discuss them honestly with us so we will be able to help you prepare a letter of explanation to place in your loan file once the loan is in process.
Once you have been pre-qualified, then the actual process of the loan begins.
Each borrower is handled on a case-by-case basis. If you are not sure if you qualify, give us a call at 818-920-1600 to discuss your personal situation or click here to complete our short pre-qualification form. We do not charge any upfront fees to be pre-qualified!
The Loan Application
The loan application is the beginning of the actual process in getting a mortgage loan. We will help you in completing the loan application and go over the documentation that will be needed in processing your loan. This can be done over the phone or the application can be e-mailed to mailed (snail mail) to you. Some of the documentation that you will need to submit with your loan application include the following items.
1. 2 years W-2's and Federal Tax Returns
2. 2 current paystubs (to equal one full month of pay)
3. 3 months bank statements to show savings and down payment
4. Gift letter (if you are receiving a gift for the down payment or closing costs.
5. Either the name, address and phone number for your landlord or 12 months cancelled checks (front and back) for your rent payments if you are currently renting.
Once we have everything back from the borrower, we will start the processing of the loan.
Processing the Loan
Once we have your completed loan application, the processor will open your loan and start getting it ready for underwriting. Opening your loan includes, inputting your information from the loan application into the processing software, ordering credit (if this was not done during the pre-qualifying phase), opening escrow and title, ordering the appraisal. (Please keep in mind that there may be an appraisal fee that is charged during this process) A check made out to the appraiser may be required. The processor will also be verifying the documentation that was submitted on the loan application.
Verifying the documentation can include sending verification forms to your bank, employer and landlord. The processor will also look over your credit report and if there are any derogatory items, they will request a letter of explanation from the borrower.
Once all the items ordered have been received, the processor will review everything. If there is any more documentation required from escrow, title, appraiser or the borrower, they will request it at this time. Once the processor has all documentation, they will then submit the loan to the underwriter for underwriting the loan.
Underwriting the Loan
The underwriter is responsible for determining if the file is suitable for approval. Once the underwriting reviews the file, they will either issue an approval, a suspense or a denial.
If the loan is approved, the underwriter will probably have conditions on the loan that need to be met before funding the loan. We will go over the conditions with the borrower, escrow, title or appraiser depending on who will be responsible for the particular condition. Some of these conditions may include updated paystubs, purchase agreement, letter of explanations, etc.
Once all conditions have been met and signed off by the underwriter, the loan documents are drawn and sent to the closing agent (escrow or closing attorney, depending on the state you are located).
When the documents are given to you for your signature, be sure to read them carefully before signing. Check to make sure that the interest rate and loan terms are the same as what you agreed upon. Also, verify that the names and address are correct on all documents. The closing agent will also let you know the final dollar amount you will need to bring in to escrow for the down payment or closing costs. They may request that you bring in a cashiers check instead of a personal check for the down payment or closing costs.
Once all documents are signed, the closing agent will send them back to the lender. The lender will review all documents and if all is correct, they will arrange for the funding. Once the loan is funded, the closing agent will arrange for the Deed of Trust to be recorded. When the recording is confirmed, the closing agent will print up the final closing statement and they will disburse the funds.
This process can seem daunting to some borrowers, however, working with a qualified mortgage professional will help the process go through with ease. To be pre-qualified or pre-approved, please click here or call us at 818-920-1600 to get the process started.
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Licensed under the CA Department of Real Estate