I created this home loan process timeline to give you a roadmap to reference. I understand that lending can feel like a foreign language to many. It’s important for you to understand what’s expected from both you, the borrower, and me, your mortgage loan specialist, during the loan process. If anything here is unclear, or you want to discuss further, please feel free to reach out.
The first step in the home loan process is preapproval.
Before going to look at homes you need to be pre-approved. This will allow you to shop smart, looking at homes you can afford. I will do a quick 10-minute home loan application with you. This can be done over the phone, online via a secure form, or in person. At that time we collect your personal, banking, and income information.
Then I will discuss with you the loan that fits your needs, from the down payment, monthly payment, interest rate, and closing cost.
Next, I run your loan for pre-approval. The preapproval is a computerized process that all loans go through. It is based on the information we gathered about your finances, credit rating, and more. You are not locked into an interest rate at this point.
Once you are pre-approved for your home loan, it's time to start looking for your new property! For many, this part of the home loan process is the most exciting.
At this time, I'll email you a list of documents needed to verify the information you gave me over the phone or via the online loan application. It's very important to email me, fax me, or meet me in person to give me all of the needed documents as soon as possible so we can complete this step and we are not in a rush once you find a property you like.
Below is the list of documents the lender will need:
- Recent W2’s (previous two years)
- Recent tax returns (previous two years)
- Recent 30-day pay stubs
- Driver’s license
- Recent 2 months' bank statements (need complete bank statements)
- Recent 2 months' 401k statements (if you're using a 401k for the down payment)
- If your getting a gift for the down payment, let me know and I will let you know what’s needed for that.
Down payment funds cannot be in cash and should be held in your bank account at least 60 days in advance of purchase.
Do not extend any new credit or buy a new vehicle at this time!
3: ACCEPTED OFFER
At this point, you've found a property you love and your offer has been accepted! I should already have all of the documents I requested so that your loan file is complete.
Next, I will order the third-party fees (closing costs) for your loan from the title company and we DISCLOSE on your home loan. Disclosing is when we email you your initial loan application, the loan estimate, and all related home loan disclosures based on this specific property. You will review all information and documents, and sign if you are ready to move forward.
These loan documents are just the initial documents, not the final documents; any typos or corrections are done internally after you have electronically signed. You will need to open the email and follow the instructions in the body of the email to electronically sign everything.
Once you have signed, I am then authorized to submit your loan, order the appraisal, and stay on track to meet our closing date.
Do not be alarmed when you see the loan estimate, it is just an estimate and the fees will adjust based on the date we close the loan. The final loan numbers are updated to the correct amounts once the bank gets your loan package and the interest rate is locked in (you are not locked in when the initial loan is disclosed).
The reason some items are not disclosed at the time of disclosing is that the bank has not seen the loan package yet and is unaware of any seller credits or if earnest money has been given. These will be applied to the loan package after the bank reviews the loan.
Banks are regulated and audited so they cannot charge you for anything but true costs. It would be a violation to do so and they risk huge fines, imprisonment, and the loss of the right to do business should they break this rule.
At this time your documents and loan application are submitted to the bank for underwriting. We will also order your appraisal at this time.
Underwriting is when the bank reviews all the documents you gave me. They will let us know if anything else is needed.
The cost of an appraisal is approximately $750-850 and the borrower is responsible for paying this fee.
5: GET APPROVAL
At this point, the bank has given me a list of any additional documents or information needed in order to issue final loan approval.
I will reach out to you by email and phone to let you know what these items are. It's imperative you return these items to me within 48 hours so we can stay on track for your closing date.
One of the conditions will be your homeowner's insurance information. You will need to get a homeowner's insurance policy in place now on your new home.
Once you have your new homeowner's insurance policy set up you will need to give me the name and phone number of your insurance agent, and I will have my processor contact them for the insurance binder. In order for them to give me the binder, you will need to give your insurance agent permission to release information to KG Processing Robin Parker. She is my processor and orders this on your behalf.
6: LOCK THE LOAN
During the process of getting all final conditions the bank has requested and the appraisal back, I can now lock in your loan rate. This is a crucial part of the home loan process because it means that we lock in the current interest rate for your home loan.
I recommend locking a loan after we know the return date for the appraisal because if something comes back from the appraisal that needs attention or if there are any repairs needing to be done, we will have time in the 30-day lock period to get it done.
Locking Your Interest Rate
The best interest rate is for a 30-day lock. A loan can be locked for a longer period, but there is a higher cost with what is called an "extended lock." My goal is to time the closing process appropriately so that we can avoid these additional costs for you.
Once we lock in your interest rate, we need to close within that designated time frame of 30 days or less. If we don’t close by the expiration date, you are required to pay additional fees for an "extension.".
Rates fluctuate and change on a regular basis. With this in mind, I will update you weekly on what the current interest rate is via text or email. When you are ready to lock in a rate, you simply need to let me know.
I can lock your loan's interest rate any weekday, up to 4 p.m. PT, Monday through Friday.
At this stage in the home loan process, you have given me permission and I have locked in your loan's interest rate.
Once this happens, the bank will disclose/email your locked Loan Estimate which you will sign electronically.
I will text you when it is emailed because signing it immediately is of high importance and keeps us moving on track to closing.
8: CLOSING DISCLOSURE
Now, all of your conditions are signed off and the appraisal is in.
We have permission to issue the Closing Disclosure (or CD). It is very important for you to electronically sign this right away to stay on track for your closing timeline.
The closing disclosure is the final document needed for your signature before your official loan documents are emailed to the title company.
You may sign your official loan papers as soon as 3 days after the closing disclosure document is.
The numbers on the closing disclosure will be pretty close to the final number needed for your cash to close, but not exact.
The title company has received your loan documents and will make any necessary corrections, apply credits, balance with the bank, and then issue me your closing statement with the exact dollar amount needed to close.
I will review everything and make sure it is correct. I’ll then contact you to set up your appointment to sign with the title company as well as let you know what your cash to close amount is.
Please understand that you may need to request time off from work or come in late that day or leave early in order to sign your papers. The title company is open from 8 am - 5 pm PT. The earliest we can sign is 8:30 am and the latest we can sign is 4:00 pm.
10: CASH TO CLOSE
If you are signing the day before your scheduled date to close you may bring a cashier's check to closing.
If you are signing on the day of your scheduled date to close you will need to wire the funds to the title company the day before you sign.
Reach out to me so I can have the title company email you wiring instructions. If you do wire, please print the document and then call the title company to verify the routing number and account number before sending the wire.
The title company must have the funds the day before closing in order to fund and record the transaction.
11: SIGNING DAY
This is the final step in the home loan process - signing day!
Make sure you have your driver's license with you and a BIG SMILE; this is your day! You will have brought a cashier’s check if it’s the day before closing or you may have already wired your closing funds.
You will sign all of your documents at the title company. Once you've signed, the title company will contact the bank to send back all required documents to finalize the loan. They will also request a wire from the bank of the money for your home loan.
Once everything is received, the title company will fund and record the real estate transaction.
Now, the home is officially YOURS!
Your realtor will give you your keys.
YOU ARE NOW A HOMEOWNER!