Steps Toward Mortgage Closing

Steps Toward Mortgage Closing

For many people, especially first time homebuyers, the process of obtaining a mortgage loan may seem daunting. While the process is actually simpler than you might think, it’s common for the raw scope of it all to be a bit intimidating.

At City Creek Mortgage, we’re here to help. Here are each of the basic steps of the mortgage process, from pre-approval to closing day.

Pre-Approval

Pre-approval is basically a financial screening – it happens before you technically apply for any loan. It’s a process whereby a lender reviews your financial situation to give you a basic idea of how well you’ll qualify for certain loans and loan thresholds. They might tell you what sort of mortgage rate you’re likely to be approved for. This step can help you narrow your home search and make sure you’re in good financial shape.

Purchase Agreement

Once you’ve been pre-approved for a given amount, you can begin shopping around for homes within that price range. Once you’ve found a home you want to buy and signed a purchase agreement, you can move to the loan application stage.

Loan Application

This is when you’ve made an offer on a home that’s been accepted, and you have your pre-approval for a loan in hand. From here, you fill out a basic form (Fannie Mae form 1003), which asks for basic information on the property, the loan type, and your personal details.

Mortgage Processing

Once you’ve filled out your application, loan processors will collect a number of documents that relate to both your finances and the property you’re buying. They’ll review these documents to ensure you’re ready for underwriting, and may order credit reports, verify income, or order a home appraisal to determine exact property value.

Underwriting

This is the stage where an independent third party, known as an underwriter, will come in and examine all loan documentation. This is to ensure everything is compliant with lending requirements and guidelines – the underwriter has the authority to reject the loan if either the borrower or lender doesn’t meet various requirements. In some cases, the underwriter will give the borrower or lender a list of conditions that needs to be resolved before the loan can be completed – this is called a conditional approval.

Closing

Finally, you’ll be at the loan approval and closing stage if the underwriter is satisfied with both parties. Closing involves sending all relevant documents to the title company handling the process – it varies by state, but it’s mostly paperwork-oriented.

For more on the basic mortgage process, or to learn about any of our mortgage services, speak to the pros at City Creek Mortgage today.