Overview of Home Mortgage Process
Posted on September 5, 2019
Finding your dream home can be exciting, but it is important to do your part and work closely with your lender through the process. You might be wondering what this all entails, below is a high-level outline of the process and steps within each one.
- Loan Application
- You may have been pre-approved for a loan so you knew what price range you could afford, but in either case, you’ll need to complete a loan application, either electronically or with your loan officer. You’ll also be asked to provide a bit of documentation, including but not limited to, pay stubs, bank statements, tax returns, list of debts, employment verification, etc.
- Verification of Application
- Once you’ve completed the application and provided the documentation, a loan processor will verify all the information. At any time during the closing period, you may be asked to provide additional information to meet lending guidelines. This can be as simple as a letter explaining a late payment on your credit report, a large deposit on a bank statement, a gap in your employment/residence, or even updating a pay stub. Once all your information has been verified, the loan will be submitted to underwriting for conditional approval, pending the appraisal.
- Any time you purchase a home, you’ll want to have it inspected by a certified inspector (you Realtor should recommend one). An inspector will check the electric outlets and lights, the plumbing, the roof and siding, the windows, the furnace and water heater, etc. Once complete, they will provide you with a report of their findings, and then you and your realtor will identify which issues you want the seller to fix before the purchase (or have the price adjusted accordingly) in the Inspection objection document.
- The seller can agree or disagree, and once this negotiation is complete, the resulting Inspection Resolution details will entail the work the seller will complete or what financial considerations will be given (reduced price). Your lender will also get a copy of these two documents as they will need to verify that the asset they’re funding is safe and operational.
- You and your lender will both want to ensure that the value of the house you’re planning to purchase is in line with the price. The appraisal will determine the value of the home. Because an appraisal can cost more than $500, it’s not ordered until after Inspection Resolution in case the sale is cancelled because the buyer and seller can’t agree on how to respond to the issues within the home.
- The mortgage loan amount is based on the purchase price or appraised value, whichever is less, so if the appraisal comes in lower than the purchase price, you can either negotiate with the seller to lower the price accordingly via the Appraisal Objection, or you can increase your down payment to make up the difference. If the appraisal comes in higher than the purchase price, kudos for being a smart buyer: the seller cannot negotiate to increase the sales price.
- Final Approval
- Once the appraisal has been received and any Appraisal Objections are clarified, the entire loan file is re-submitted to the underwriter for final approval, or “clear to close,” a step that must be completed by the Loan Objection Deadline. Once this is complete: Congratulations, you are Approved!
- After Approval
- Once approved, the loan file enters the closing phase: loan figures are sent to the title company, which then calculates any additional fees (title company fees, sellers fee and lenders fees) and provides a settlement statement that reflects the final amount you’ll need at closing: your down payment and closing costs.
Wherever you buy, in Colorado or even out of state, On Tap Credit Union’s home consultants are here to help you navigate the mortgage process. For more information on your options, call 303.279.6414 or email inquire@OnTapCU.org.