Guide to the Mortgage Process

1. Application

The first step is simple; you need to apply. Contact me if you want more information before you begin. We need your financial information to process your application: your current mortgage or rent, your other loans, your income, your assets, etc. How you start is up to you. You can apply on-line here, or if you prefer, stop by my office and take care of the paperwork in person. If you are short on time you can apply over the phone. Remember, I can help you with any part of the loan process.

2. Preliminary Approval

Within 3 days (usually less) we'll have an answer for you. This answer is be based on the information you give us and our work to match you with the best possible financing source and mortgage product. I can present you with your options and explain every detail at this point.

3. Loan Processing

We need to make sure you understand what's going on and its financial implications; this is a big decision! I will be there to help you if you have any questions. As you might guess, we need paperwork completed and signed before we can go on. It's always a good idea to make copies of forms to keep for your records. Here is a summary of the forms involved:

Good Faith Estimate of Settlement Costs - Shows you all related charges and fees for getting a mortgage.
Truth in Lending Disclosure - This lets you know what your estimated annual percentage rate of interest (APR) will be and any other program features that apply.
Borrowers Certification - This authorizes that all the information you provided is correct to the best of your knowledge. It also lets us finalize the process by contacting your landlord, employer, mortgage company, etc. and getting your credit report.

4. Appraisal

Next, we'll arrange an appraisal of the property to determine its fair market value. The appraiser will visit the property and compare its features, floor plan, lot, etc. against other similar properties in the area. (You'll receive a copy of the appraisal at closing.) We also obtain a title report (an attorney's opinion) at this time. This will tell us the legal details of the property including liens against it (i.e. another loan).

5. Final Approval

Now it's time for the underwriter to step in. Basically, an underwriter looks over all the paperwork and loan details and agrees that it supports the preliminary approval issued in step 2. What do they look for? Here are a few key items:

The Property: They review the appraiser's report of the property's value.
Total Debt Ratio: The ratio between all your sources of income against all your debts indicates whether you can afford the payments.
Cash Reserves: After your loan settlement costs are paid, this is the amount of money left over in your bank account. You'll still need cash to live on until the next paycheck comes.
Credit History: Looking at your past debts and payment history is a measure of how likely and able you will be to repay your loan.
Employment History: This isn't only how much you make now, but how stable your income tends to be.

6. Closing

You're finally here. The last pile of paperwork. But don't worry - it's the closing agent's job to explain everything to you so that you know what you are signing. If you like, I will try to arrange to be there as well. Our closings go quite smoothly because we make sure everything is in order on our end, and we keep you educated about the process. This is when you will be expected to take care of the closing costs, and the balance of your down payment.