Removing the Mystery from … The Loan Process
The steps outlined here will give you a very good idea of what you can expect from your "Apple Street" mortgage …
Call us for a free consultation. First we’ll listen to your needs and financial goals. Then we may suggest several options that are most suited to your situation. We’ll analyze each option for you so that you can make an informed decision on the type of product and terms that you choose. In most cases, we can prequalify you right on the phone.
Fill out a loan application. This is very simple because we always do it for you – either over the phone or in person (of course you can apply on the website if you like). Then you will be provided with a Good Faith Estimate (GFE) within three days of application. You will be required to sign the loan application, the GFE, and several other disclosures provided to you. There is no application fee. However, you do need to pay for your appraisal and credit report because these are fees incurred by third parties that are required to get the loan process started. We never run your credit report without your approval and, in many instances, we can delay the appraisal until after initial loan approval so that you don’t end up paying $300 or more for a loan that doesn’t get approved.
We’ll choose the best wholesale lender for you depending on your needs. Then, for conforming loans, we’ll submit your loan application to an on-line computer automated underwriting system and will usually know within minutes whether you are approved and what documentation will be required. Sometimes this may be as little as a single bank statement or maybe nothing at all! Some nonconforming loans may require a few extra days for approval while an underwriter reviews it.
Gather your documentation from the potentially very short list that we will provide to you. You won’t be asked to include the kitchen sink unless we actually need it!
Lock in a rate so that you will be guaranteed that rate at closing. Alternatively, you may choose to “float” your rate. You might “float” if your closing is a long way off (maybe you’re building a new home and closing is still three months away). Or you might believe that rates will improve before your closing takes place. Keep in mind that - the longer the rate is locked - the more it is likely to cost. A typical lock period is 21 to 45 days. It is always in your best interest to work closely with us in gathering the required documents for your loan as quickly as possible to reduce your risk of losing your lock. If that happens, you may be subject to the prevailing rate at the time of closing.
Your rate and closing costs will be quoted in the simplest terms possible – your rate and total cost! The two variables behave like a seesaw, as rate goes up, costs go down and vice versa. We’ll provide you with options on rate and cost that best suit your needs. Lenders who quote a low fixed cost are simply adjusting your rate. Your Good Faith Estimate will break down the costs if you’re interested in that sort of thing – and we’re happy to do it - but understanding the breakdown of the costs is really just an exercise. The lending industry is moving towards standardizing the rate/cost method of characterizing your loan – but Apple Street Mortgage has always done it this way – because it just makes sense!
We’ll order your appraisal. Your appraiser will usually contact you within a couple of days to schedule the appraisal. In some cases, you may qualify for a “drive-by” appraisal (or no appraisal at all) which costs less and means that the appraiser will not need to set up an appointment with you. If you have an appraisal that is less than 12 months old, you may not be required to get a new appraisal at all. Always schedule your appraisal as soon as possible!
Processing/underwriting. Once all of your documentation is gathered, we’ll process it and submit it for underwriting. Processing includes a number of things like ordering title documents, verification of employment, verification of insurance, subordinating an existing second mortgage, and packaging all the required documentation for submission to an underwriter. The underwriter carefully reviews the full package according to established guidelines, and renders a decision to extend credit. Processing and underwriting are often performed concurrently but a final underwriting decision cannot be made until all processing has been completed.
The title company representative or “closer” will go over the small mound of paperwork that you will sign. This will include a HUD-1 settlement statement that details all the costs of the transaction. If your loan is for a new purchase or an investment property, the loan will fund on the day of closing. If your loan is for a refinance of your primary residence or second home, the loan will fund after a three-day right of rescission period. During this time, you may choose to cancel the loan if you are not comfortable with it for any reason.
After closing, depending on your wholesale lender, the servicing of your loan may be transferred to another servicer. Some lenders are more likely to transfer servicing than others, but this is just how the industry works so we can't guarantee otherwise. However, if you have any question at all down the line about your new servicer, your escrow account, tax deductions, or anything else about your mortgage, we are always here ready to help!
What can you, as the borrower do to help make the process as smooth as possible?
There are several things that you can and should do to help yourself obtain your loan:
-respond to requests for documentation as quickly and accurately as possible.
-try to have one primary point of contact on your end.
-understand your loan and ask questions. This includes things like your loan terms, your closing costs, payoff amount, and prepaids.
-plan ahead, especially as your closing date nears. Try to be flexible on your closing time and arrange to have funds available in advance. Plan to have a sitter for the kids (but if you can’t – that’s OK too!)
At Apple Street Mortgage, we understand the potential frustration or inconvenience that borrowers sometimes associate with the loan process. But, at Apple Street Mortgage, it is usually very straightforward and painless. We try our best to help you understand the process and help you plan for it. In short, we make it easy for you. Then you can sit back and enjoy your new home or the additional financial flexibility that refinancing brings!