Buying a home usually means applying and being approved for a mortgage. This may seem like a mysterious process to most people but once you unpack it, it is a series of practical steps in order for a lender to ensure that you are a risk that they are willing to take.
Each lender is a bit different in their approval criteria, but in the case of most conventional, jumbo and government-backed mortgages, a borrower will be taking these steps from application to closing. When you understand the process, you can be proactive when it comes to getting a quick and seamless approval and closing.
Pre-Qualification
Before you even schedule an appointment with a real estate agent, it’s important to understand how much you can spend on a home. The best way to do this is with a mortgage pre-qualification.
A pre-qualification is a no-cost, no-obligation assessment of your financial situation that will help you understand your limits when house shopping. Your real estate agent will typically suggest this step. In a hot market, having a pre-qualification in hand is one way of strengthening your negotiating position with a seller.
Application
When you have gone under contract for a home, you will have a limited time to have a home inspection conducted and to be approved for a mortgage. This is when the mortgage application process begins.
Your mortgage professional will ask for documents supporting your stated income and assets. This may include things like W-2s, pay stubs, bank statements or other supporting materials. Your lender will also want to understand your current financial obligations and payment history so a credit report will be ordered.
Mortgage Processing
Once your files moves into the processing phase, an appraisal of the home will be ordered as well as a survey and title work ordered. Most lenders will want specific inspections such as a roof inspection ordered to ensure the home is in good condition.
This way, your lender can be assured that the home is worth what you are paying (and what they are lending based upon) and that there are no title issues against it that may put their mortgage in jeopardy. Once the mortgage processor has compiled all this information, the file will go to the loan underwriter.
Underwriting
Once your loan package gets to this final phase of approval, the lender’s underwriter will review all the documentation to make sure that everything fits with the lender’s guidelines and regulations. If other information is needed, the underwriter will contact your loan officer to gather any further documents required from you.
Closing
Once your loan has been approved, a closing date is set. Prior to closing, you’ll receive a closing disclosure which will set out all terms of the loan, closing costs and what you will be required to bring to the closing table. After closing, all funds will be distributed and you will officially own the property.
At Alliance Lending, we believe that an educated borrower is the best borrower. We want the lending process to be as seamless and transparent as possible. If you are looking for a mortgage in San Jose or the surrounding areas, give us a call (408) 226-4000 to see how we can assist you.
