Getting a home loan may seem overwhelming, but when you understand the steps in the process you will be able to move through the transaction easier. Let’s look at the steps in the process beginning with identifying your needs.

Ask Questions

A good lender will ask you several questions to uncover your needs before jumping into quoting you the day’s interest rate. This will ensure that the loan program is the best for you and your needs before you get quoted an interest rate. Each loan program has it’s benefits and depending upon how much you bring in for a down payment, what your credit score is and what your debt-to-income ratio is, your lender will ask questions to identify the best option.

Cost Estimate

You should receive a nonbinding pre-application cost estimate for different loan scenarios. These are provided based on your credit score and an estimated valuation of the property. Your final pricing will be based on your confirmed credit score, acceptable property valuation, selected loan program and market pricing as of the day and time you request a rate lock.

Documentation

Your lender will work with you to take a complete application. They will ask you for your income documentation, bank statements and tax returns. It’s important to provide them

with all documentation as quickly and efficiently as you can. This will help expedite the process.

Loan Estimate

Your lender will send you disclosures. This is different from your original loan estimate and will include all fees associated with your loan. This is called a loan estimate and it is just that, an estimate of your loan costs. These costs may change through the process based upon when you lock your loan and the value of your home, which will be determined once you have your appraisal.

Intent to Proceed

After reviewing your options and addressing any questions, you will make a decision and notify your lender that you are ready to move forward with the loan application. This is called your intent to proceed. Your lender may charge you an upfront fee to pull your credit score.

Appraisal

Once you have given your intent to proceed, your lender will order your appraisal. The appraisal will give you the value of your home based upon the appraiser’s assessment.

Underwriting

Once you have submitted all of your documentation, and your appraisal is completed, your loan file will be reviewed by an underwriter. The underwriter may come back and ask for additional information to answer any questions they may have during the underwriting process. Your lender will notify you of any additional documentation needed. Again, it is important to provide this information to them in a timely fashion.

Rate Lock

You may lock in your interest rate at many different stages in the loan process. It can be done at the beginning of the process, before the loan goes to underwriting, or once the file is complete and out of underwriting. Your lender will work with you to discuss rates and options. Once you lock in your loan, that pricing will be locked in for the time frame that your lender tells you. It is important to lock in your interest rate for the duration that it will take to close your loan. If you do not, you stand the risk of losing your pricing if your loan takes longer to close.

Clear to Close

Once your loan has it’s final approval from the underwriter and all conditions are cleared, you will receive a clear to close from your lender. They will send you information that you need to follow that will include how to acknowledge your closing disclosure and how to close on your loan.

Closing Disclosure

Just as you received your loan estimate at the beginning of the transaction, you will receive final disclosure that are called closing disclosure. The closing disclosure will show all the costs of your loan. You can compare the costs in the closing disclosure with the costs in your loan estimate. The costs should be the same. If there were changes during the loan process, you will have received an updated loan estimate reflecting those changes. If you have questions about the costs, you should talk to your lender.

Signing

Signing your commitment to the home loan happens with a settlement agent or attorney, depending upon your state requirements. The settlement agent coordinates

with the lender, the borrower, the buyer’s agent, the seller and the seller’s agent, and the seller’s lender (in a purchase transaction) to review all closing costs and provide final closing disclosures, verify all information, sign the closing documents and when approved disperse the funds for closing. Once all is complete, your transaction is finalized.

Most loans take between 30 to 45 days from beginning to end. It’s important to stay in communication with your lender during the process and if you have any questions, make sure and get your questions answered.

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