When you have a better understanding of what the actual mortgage loan approval process is, you'll be able to accommodate the assorted requested for documentation and maintain your cool throughout the process.  So here's what you need to know.

 

Checks & Balances

 

Once your personal data's been input into "the system," a typed loan package will be generated. If you've already got a property under contract, a loan package (including your loan application), Good Faith Estimate, Truth in Lending Statement and several other disclosures will be sent to you for your review and signature within three (3) business days.

 

At this stage, the loan package is for acknowledgment purposes only: It doesn't bind you to the rate, fees or the final loan amount. The numbers and personal data will continue to be updated up until closing. Also worth noting? Any personal information erroneously disclosed, can only be lined-through, corrected and initialed (White out is not permitted).

Good Faith Estimate: It's the current market rate at the time of application (it's not your locked rate), and the estimated cost of the loan. The Truth in Lending Statement will also show your Annual Percentage Rate (APR)-and represents the dollar amount of the financed charges you pay either up front or over the life of the loan-converted to an annual interest rate.

The APR includes the origination fee, other charges and interest on your mortgage loan and as a result, reflects a higher interest rate than the interest rate disclosed on your Good Faith Estimate.

Up front fees: Nominal fees may be requested at application for any appraisal or credit reporting service required.  I said nominal...don't get ripped off in this area, kids.

Getting Approved!

There are three steps in the review procedures your file is going to go through:

Stage 1...Processing: This is where the rubber meets the road and all of your financial documentation is confirmed. Crucial information is verified, including:

            - Your employment

            - All income and assets

            - Any derogatory credit information will also be addressed and (if necessary), corrected.

            - Appraisal and survey services, proof of insurance, title commitment and tax certificates will also be requested.

            - If you're refinancing, an existing survey can be provided to reduce the cost of your survey fee. However, if the survey doesn't reflect the current layout of the property being financed, a new survey will be required. All existing surveys are subject to review and approval by the lender and title company.

 

Stage 2...Underwriting: Once the processing has been completed, the file is then reviewed by the Underwriter. The Underwriter will:

        - Review the appraised value, property "comparables" and condition of the property being financed.

        - Note any further supporting documentation for asset strength and satisfactory payment history. If any additional (supporting) documentation is required, the Underwriter will return the file to the Processor so this additional information can be requested and collected and meet the subsequent conditions of approval.

Ben's Underwriting Bottom Line? This sounds a lot more ominous that it really is: Just get 'em the documentation they're asking for to begin with...and everything else will fall into place. If they need more information from you, they'll let you know. (And don't drag your feet!)

Stage 3...Closing: After the Underwriter has cleared all of their necessary hurdles and the conditions successfully met, the Processor submits the file to Closing. The Closing Department produces the final closing documents to be provided to the title company.