The Timeline of a Mortgage Loan
Now that you know the basic terminology, what do you do with it? The first step is fill out an application! You can come into the Bank and meet with one of our seasoned loan officers and fill one out, or pick up a paper application to take home, or print one off our website to bring or mail in, or even fill it out on our online application portal. Don’t worry if you don’t have all the answers, our friendly loan officers will ask questions to assist in getting the pertinent information gathered.
After the Bank has your completed application, we will start the process to get you approved for the loan. When it comes to qualifying for a loan, we look at several factors including income, the property value, other assets you own and your credit history. A credit report will be pulled to look at the score as well your existing debts and payment history. Your monthly income will be compared to your monthly payments to figure your debt to income ratio. Generally, in order to qualify, you should keep your ratio at no more than 43%, including your new house payment. This means that you are spending 43% or less of your income on all of your debt payments.
If and when you are approved, your loan officer will contact you to go over your Loan Estimate and other preliminary disclosures. We are required to have this available to you within three days of receiving the completed application. The Loan Estimate is a complete breakdown of the costs associated with the loan as well as rate, term and payments. This is your time as the borrower to ask any and all questions to make sure you understand the process. There are no fees to you as the borrower to get to this point.
If and when you decide to move forward with the loan, your loan officer will start the verification process. We will hire a qualified appraiser to determine the market value of the property. We will order title insurance that will ensure the title to the property passes from the seller to the borrower free and clear of any prior liens. We will verify your employment and income sources. Then we will prepare the final loan paperwork for closing. We generally estimate 30 days from application to closing.
Three days before closing, we will give you a copy of the Closing Disclosure. This document will be very similar to the Loan Estimate you received at the beginning of the process. This will outline the final terms of the loan and any closing costs associated with the loan. You will know exactly the amount of funds to bring on closing day and when your first payment will be due. On closing day, we will work with the real estate agent and settlement company to sign all the loan documents and legal forms to formally finalize the process.
But our relationship with you doesn’t end here. All of our loans are serviced locally by our team, you will not find your loan sold on the secondary market. If you have any questions or troubles with payments, we are here to help. In addition to monthly payment notices, you will also receive notices on an annual basis for your escrow account.
