See financing section for more detail on types of mortgages, lenders, required documents, and other steps to prepare.
Pre-Approval (should be done before shopping for homes)
- The application – The key to the loan process is the initial application. The lender will obtain all information so unnecessary problems and delays may be avoided. This is the best time to discuss loan programs that fit your needs. Please review financing your purchase section of our website as this should be done prior to shopping for homes.
- Automated Underwriting – Once your application is completed, the lender inputs the application into the automatic underwriting system. This is an automated financial evaluation program that analyzes the data from the loan application of the borrower – income, credit history, debts, property details, debt-to-income ratios, etc. This process evaluates the borrower’s financial situation and makes a credit decision. The lender will also run a credit report.
- Requesting Documentation – The next step after receiving the initial lending decision is that the loan officer will request certain documents such as bank statements, W2’s (2 years), source and verification of funds, and any other supporting documentation.
Enter into Contract on a Home
- Loan Submission – Once all of necessary information has been put together, the lender assembles the package and submits it to the underwriter for final approval. The final loan package includes the contract on the property, the property appraisal, preliminary title reports and any conditions identified in the automated underwriting process. The lender submits the final loan package to the underwriter approval.
- Loan Approval – The underwriter reviews the contract, property appraisal and preliminary title reports and confirms the information from the automated underwriting process. Once all criteria is met, the loan is approved and other conditions may be requested as terms of funding.
- Rate Lock – The lender will discuss the loans available and based on the outcome of the property purchase and final loan approval, the buyer may want to review other loan options. A final loan decision is made and the request for rate lock is made (the buyer does have an option as well to lock in the rate early on as it is often times good for 30-60 days depending the lender.
- Documents Are Drawn – After the loan approval, the loan documents (including the note and deed of trust) are completed and sent to the title company. The escrow officer calls the borrowers to come in when the papers are ready for final signature. At this time, the borrowers are told how much money they will need to bring in to close the loan (deposit plus closing costs).
- Funding – Once all the parties have signed the loan documents, they are returned to the lender, who reviews the package. If all of the forms have been properly executed, the funds are then transferred. At closing, the borrower must present a cashier’s check or arrange for a wire transfer of funds for the required closing costs and payments. Funding conditions must be submitted and satisfactorily met at this time.
- Recordation – When the title company receives the funding check from the lender, the title company makes the lender’s security for the loan a matter of public record. This is done by recording both the note and deed of trust at the County Recorder’s office. Escrow is now officially closed.