Loan Process

The first step in obtaining a loan is to determine how much money you can get preapproved for. When buying a home, you should determine how much home you can afford even before you begin looking. To start the preapproval process by completing our online application, including providing us information regarding your income, credit, assets and liabilities, click here

It is recommended that you get pre-approved before you start looking for your new house so you: 

  1. Are looking for properties within your range.
  2. Are in a better position when negotiating with the seller (seller knows your loan is already preapproved).
  3. Can help us close your loan quicker

More on Pre-Qualification
     LTV and Debt-to-Income Ratios
     FICO™ Credit Score
     Self Employed Borrower
     Source of down payment

LTV and Debt-to-Income Ratios
LTV or Loan-To-Value ratio is the maximum amount of exposure that a lender is willing to accept in financing your purchase. Lenders are usually prepared to lend a higher percentage of the value, even up to 100%, to creditworthy borrowers. Another consideration in approving the maximum amount of loan for a particular borrower is the ratio of monthly debt payments (such as auto and personal loans) to income. Rule of thumb states that your monthly mortgage payments should not exceed 1/3 of your gross monthly income. Therefore, borrowers with high debt-to-income ratio need to pay a higher down payment in order to qualify for a lower LTV ratio.

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FICO™ Credit Score
FICO™ Credit Scores are widely used by almost all types of lenders in their credit decision. It is a quantified measure of creditworthiness of an individual, which is derived from mathematical models developed by Fair Isaac and Company in San Rafael, California. FICO™ scores reflect credit risk of the individual in comparison with that of general population. It is based on a number of factors including past payment history, total amount of borrowing, length of credit history, search for new credit, and type of credit established. When you begin shopping around for a new credit card or a loan, every time a lender runs your credit report it adversely effects your credit score. It is, therefore, advisable that you authorize the lender/broker to run your credit report only after you have chosen to apply for a loan through them.

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Self Employed Borrowers
Self employed individuals often find that there are greater hurdles to borrowing for them than an employed person. For many conventional lenders the problem with lending to the self employed person is documenting an applicant's income. Applicants with jobs can provide lenders with pay stubs, and lenders can verify the information through their employer. In the absence of such verifiable employment records, lenders rely on income tax returns, which they typically require for 2 years.

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Source of Down Payment
Lenders expect borrowers to come up with sufficient cash for the down payment and other fees payable by the borrower at the time of funding the loan. Generally, down payment requirements are made with funds the borrowers have saved. If a borrower does not have the required down payment they may receive “gift funds” from an acceptable donor with a signed letter stating that the gifted funds do not have to be paid back.

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Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each.  Whether you are buying a home or refinancing, there are 2 basic types of home loans. Each has different reasons you'd choose them.

1) Fixed Rate Mortgage

Fixed rate mortgages usually have terms lasting 15 or 30 years. Throughout those years, the interest rate and monthly payments remain the same.  You would select this type of loan when you:

  • Plan to live in home more than 7 years
  • Like the stability of a fixed principal/interest payment
  • Don't want to run the risk of future monthly payment increases
  • Think your income and spending will stay the same

2) Adjustable Rate Mortgage

Adjustable Rate Mortgages (often called ARMs) typically last for 15 or 30 years, just like fixed rate mortgages. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease.  You would select this type of loan when you:

  • Plan to stay in your home less than 5 years
  • Don't mind having your monthly payment periodically change (up or down)
  • Comfortable with the risk of possible payment increases in future
  • Think your income will probably increase in the future

By carefully considering the above factors and seeking our professional advice, you should be able to select the one loan that matches your present condition as well as your future financial goals.

Once you are under contract to purchase a home, or are ready to proceed with a refinance loan, you will provide documentation to support your income, assets and various other items which we will request from you, if you have not already provided these documents to us. We will register and lock your loan with the chosen lender and have loan disclosures sent to you for review and signatures. We will order title documentation that will be required by the lender. We will also order the appraisal of the property, if required, once you are through inspections (on a purchase) or once you have signed the disclosures (on a refinance).

Once we have all the documentation we need for a conditional underwriting approval, we will submit your loan package to underwriting. Within a couple of days (often hours) we will receive a conditional loan approval. This will tell us what remaining items are required by underwriting to give your loan final approval. We will communicate what those items are and once we have all required conditions, we will submit your loan for final approval. Assuming we have satisfied all of the loan conditions, we will receive final approval on your loan and move into  the closing phase.

Things to keep in mind while your loan is in the underwriting phase:
Respond promptly to any requests for additional documentation especially if your rate is locked or if your loan is to close by a certain date.
  1. Do not move money into or from your bank accounts without a paper trail. If you are receiving money from friends, family or other relatives, please contact us so we can prepare any required gift letters as well as advise on what documentation will be required to source any gift funds.
  2. Do not make any major purchases until your loan is closed.  Purchases cause your debts to increase and might have an adverse affect on your current application. Additionally, do no let anyone new run your credit before closing which could require additional documentation from you regarding whether or not you opened any new accounts as a result of the credit inquiry.
  3. Do not go out of town around your loan's closing date. If you plan to be out of town, you may want to sign a Power of Attorney.

After your loan is final approved, you are ready to sign the final loan documents. You will receive and review the documents prior to the actual closing,  to make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate. The signing normally takes place in front of a notary public, however there are also options to potentially do a hybrid closing (part of the closing package is signed electronically and the rest signed in person), or virtual closings (where you sign all closing documents electronically).

There are also several fees associated with obtaining a mortgage and transferring property ownership which you will be expected to pay at closing. Bring a cashiers check for the down payment and closing costs if required. Personal checks are normally not accepted. You also will need to show your homeowner's insurance policy, and any other requirements such as flood insurance, plus proof of payment.

Your loan will normally fund shortly after you have signed the loan documents. On owner occupied refinance loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can fund and go into effect, called your "rescission period".