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The Purchase Process
When purchasing a home, the loan process generally consists of the following 13 steps:
1. Collect Personal Information
The first step in the loan process is for you to gather your income and asset documentation. We can complete much of the application for you, but in order to do this, you will need to forward to us (via fax, email, US mail, or in person) documentation verifying your income and assets. We will need personal information (such as birth date, SSN, current home address, # of dependants, marital status, etc.) and addresses and phone numbers for employers that you have had in the past 2 years. We will also need your most recent 3 months asset account statements (checking, savings, mutual funds, insurance, 401K, IRA, etc.).
2. Apply
Once you have collected and your personal information, you can complete the entire application process by phone, fax, or online (from the comfort of your home at any time, day or night). Once your online application is received, your file will be reviewed by us and we will contact you to discuss your mortgage options and preferences. Once the application is complete and all documentation has been obtained, your file will be submitted to underwriting (usually an automated system) for credit approval. If the underwriting is automated, we will have an answer within an hour; if the underwriting needs to be done manually, we will generally have an answer within 1-3 days. While most loans are approved subject to additional conditions, some loans are declined due to credit or employment history or high debt to income levels. In such a case, we will restructure the loan (generally by reducing the loan amount/payment) and resubmit until we get an approval. We will then contact you to discuss your alternative loan options. Click here to apply online. Return to top
Once you have collected and your personal information, you can complete the entire application process by phone, fax, or online (from the comfort of your home at any time, day or night). Once your online application is received, your file will be reviewed by us and we will contact you to discuss your mortgage options and preferences.
Once the application is complete and all documentation has been obtained, your file will be submitted to underwriting (usually an automated system) for credit approval. If the underwriting is automated, we will have an answer within an hour; if the underwriting needs to be done manually, we will generally have an answer within 1-3 days. While most loans are approved subject to additional conditions, some loans are declined due to credit or employment history or high debt to income levels. In such a case, we will restructure the loan (generally by reducing the loan amount/payment) and resubmit until we get an approval. We will then contact you to discuss your alternative loan options. Click here to apply online.
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3. Approval / Additional Information
Once your loan is approved, we will let you know what additional conditions are required before we can prepare your final loan documents. Standard conditions include verifications of employment and assets, an earnest money agreement (real estate contract), appraisal, preliminary title report, homeowners insurance binder, as well as letters of explanation regarding changes in employment, late credit payments and other situations. Return to top
Once your loan is approved, we will let you know what additional conditions are required before we can prepare your final loan documents. Standard conditions include verifications of employment and assets, an earnest money agreement (real estate contract), appraisal, preliminary title report, homeowners insurance binder, as well as letters of explanation regarding changes in employment, late credit payments and other situations.
4. Verifications
Some loan programs (albeit very few) require verifications of rental history, employment, and assets (in addition to statements) in order to certify that the information that you represented is accurate. Once your loan is approved, your loan processor will send verifications out to your employers, banks, and landlords. Return to top
Some loan programs (albeit very few) require verifications of rental history, employment, and assets (in addition to statements) in order to certify that the information that you represented is accurate. Once your loan is approved, your loan processor will send verifications out to your employers, banks, and landlords.
5. Select A Property
Once you have been pre-approved for a mortgage and price range, you can make an offer on a property which appeals to you. It is recommended that you use the services of an experienced Realtor who can help you find the type of home and area you prefer. In addition to helping you find a home, Realtors can evaluate what comparable homes in that area have sold for thereby giving you an idea what a fair offer would be. They also assist you in writing and negotiating the offer. All of this service is free to you since the seller pays their commission. Return to top
Once you have been pre-approved for a mortgage and price range, you can make an offer on a property which appeals to you. It is recommended that you use the services of an experienced Realtor who can help you find the type of home and area you prefer. In addition to helping you find a home, Realtors can evaluate what comparable homes in that area have sold for thereby giving you an idea what a fair offer would be. They also assist you in writing and negotiating the offer. All of this service is free to you since the seller pays their commission.
6. Home Inspection
Having your home professionally inspected is recommended but not required. Home inspections are extremely valuable in determining needed repairs to the home. Inspectors examine the plumbing, heating, roofing, siding, and electrical systems of the home as well as the crawl spaces under the home to assess the foundation. They will then educate you as to any flaws in the property which may require repair either now or in the future. Home inspections typically cost between $250 - $450 depending on the size of the home. This is a small price to pay compared to finding out that you new dream home desperately needs a new roof, furnace, or siding. The peace of mind alone is worth the cost. Return to top
Having your home professionally inspected is recommended but not required. Home inspections are extremely valuable in determining needed repairs to the home. Inspectors examine the plumbing, heating, roofing, siding, and electrical systems of the home as well as the crawl spaces under the home to assess the foundation. They will then educate you as to any flaws in the property which may require repair either now or in the future. Home inspections typically cost between $250 - $450 depending on the size of the home. This is a small price to pay compared to finding out that you new dream home desperately needs a new roof, furnace, or siding. The peace of mind alone is worth the cost.
7. Title Insurance / Escrow
Once your offer has been accepted by the seller, the Purchase and Sale Agreement will specify a title company (to provide the title searches and title insurance) and an escrow company (to coordinate the transaction, setup the trust accounts, and clear liens on title). The escrow company will essentially act as the intermediary between you and the seller to ensure that both parties interests are being met according to your earnest money agreement. The title company will perform a title search to ensure that there are no outstanding liens attached to the property. Once they verify that the property can be transferred without incident, they issue a title insurance policy ensuring you against having the property attached by a previous lien holder. Return to top
Once your offer has been accepted by the seller, the Purchase and Sale Agreement will specify a title company (to provide the title searches and title insurance) and an escrow company (to coordinate the transaction, setup the trust accounts, and clear liens on title). The escrow company will essentially act as the intermediary between you and the seller to ensure that both parties interests are being met according to your earnest money agreement. The title company will perform a title search to ensure that there are no outstanding liens attached to the property. Once they verify that the property can be transferred without incident, they issue a title insurance policy ensuring you against having the property attached by a previous lien holder.
8. Appraisal
Once you have had the home inspected and you are comfortable with its condition, the lender will require that your home be appraised. Appraisals are used to determine the true value of the home based on the recent sales prices of comparable homes in the area. They do not typically assess the condition of the property, only the value (an inspector assesses the condition or "health" of the property). Before the appraisal can be ordered, you will asked to provide a deposit (generally via credit card) to cover the cost of the appraisal. Typically, the cost for a full appraisal is $450. Some loans will only require a limited, drive by appraisal which run between $250 - $350. In addition to the earnest money deposit and the cost of inspection, this is the last time that you will experience a cost before closing and this deposit (along with the earnest money) will be credited back to you at closing. Return to top
Once you have had the home inspected and you are comfortable with its condition, the lender will require that your home be appraised. Appraisals are used to determine the true value of the home based on the recent sales prices of comparable homes in the area. They do not typically assess the condition of the property, only the value (an inspector assesses the condition or "health" of the property). Before the appraisal can be ordered, you will asked to provide a deposit (generally via credit card) to cover the cost of the appraisal. Typically, the cost for a full appraisal is $450. Some loans will only require a limited, drive by appraisal which run between $250 - $350. In addition to the earnest money deposit and the cost of inspection, this is the last time that you will experience a cost before closing and this deposit (along with the earnest money) will be credited back to you at closing.
9. Home Owner’s Insurance
If you are purchasing a house or a town-home (not a condominium), you will also need to contact an insurance agent to arrange for a homeowner’s insurance policy to protect your home against fire, theft, vandalism and other threats. You will need to contact your loan processor with the name and phone number of the insurance agent once you have selected one. Your insurance agent will then issue an insurance binder with the mortgage companies name as beneficiary. The initial annual premium (along with a 2 month reserve) will be collected at closing. Return to top
If you are purchasing a house or a town-home (not a condominium), you will also need to contact an insurance agent to arrange for a homeowner’s insurance policy to protect your home against fire, theft, vandalism and other threats. You will need to contact your loan processor with the name and phone number of the insurance agent once you have selected one. Your insurance agent will then issue an insurance binder with the mortgage companies name as beneficiary. The initial annual premium (along with a 2 month reserve) will be collected at closing.
10. Submit Conditions
Once we have received all of the outstanding conditions that the lender has requested (e.g. appraisal, title, etc.), those items are submitted to underwriting for final loan approval. The final underwriting process generally takes 24-48 hours. Return to top
Once we have received all of the outstanding conditions that the lender has requested (e.g. appraisal, title, etc.), those items are submitted to underwriting for final loan approval. The final underwriting process generally takes 24-48 hours.
11. Loan Document Preparation
Once the underwriter has reviewed your file and signed off on all conditions, your loan is given authorization to have the loan documents drawn by your Processor (this is usually done within 24 hours). Once the loan documents are drawn, your Processor forwards the documents to the escrow company. Return to top
Once the underwriter has reviewed your file and signed off on all conditions, your loan is given authorization to have the loan documents drawn by your Processor (this is usually done within 24 hours). Once the loan documents are drawn, your Processor forwards the documents to the escrow company.
12. Signing
Once the escrow company receives your loan documents, they will review them and work up the final figures (on an estimated HUD1 Settlement Statement). They will then forward the estimated HUD1 Settlement Statement to your Loan Executive and Loan Processor for review. After verification that the final numbers reasonably match what was disclosed on the lender's most recent Good Faith Estimate, the escrow company will contact you to schedule a signing appointment and tell you the exact amount of money you will need to bring to closing. At your signing appointment you will need to bring a photo ID, a cashiers check for the amount needed to close, and any additional documents that had been asked to bring to closing. This may include updated pay stubs, letters of explanation as well as any other original document bearing your live signature. Signings usually last between 45 minutes to an hour and a half so be sure to arrange daycare and plan your schedule accordingly. Before you leave the signing appointment, you will receive a complete package including copies of all of the documents you signed at the appointment. Once you have signed all of the loan documents and given the escrow officer the cashier’s check and outstanding conditions, the escrow officer will repackage your loan documents and return them to the lender. Return to top
Once the escrow company receives your loan documents, they will review them and work up the final figures (on an estimated HUD1 Settlement Statement). They will then forward the estimated HUD1 Settlement Statement to your Loan Executive and Loan Processor for review. After verification that the final numbers reasonably match what was disclosed on the lender's most recent Good Faith Estimate, the escrow company will contact you to schedule a signing appointment and tell you the exact amount of money you will need to bring to closing. At your signing appointment you will need to bring a photo ID, a cashiers check for the amount needed to close, and any additional documents that had been asked to bring to closing. This may include updated pay stubs, letters of explanation as well as any other original document bearing your live signature.
Signings usually last between 45 minutes to an hour and a half so be sure to arrange daycare and plan your schedule accordingly. Before you leave the signing appointment, you will receive a complete package including copies of all of the documents you signed at the appointment.
Once you have signed all of the loan documents and given the escrow officer the cashier’s check and outstanding conditions, the escrow officer will repackage your loan documents and return them to the lender.
13. Funding
Once the lender receives your loan package, they will review the documents to ensure that all were signed correctly. They will also review the file to ensure that all conditions have been met. Once they are satisfied that all conditions have been met, they give funding approval and order the funds to be wired to the escrow company. Once the escrow company receives the wired funds, they will instruct the title company to record the transaction with the county. Once recording numbers have been released, you are the official owner of the home and are entitled to the keys. Keep in mind that the funding process usually takes 24 hours. This means that if you want to move in on Friday, you must sign by Thursday. Congratulations!!! You now own the home and are on your way to achieving the American Dream. Return to top
Once the lender receives your loan package, they will review the documents to ensure that all were signed correctly. They will also review the file to ensure that all conditions have been met. Once they are satisfied that all conditions have been met, they give funding approval and order the funds to be wired to the escrow company.
Once the escrow company receives the wired funds, they will instruct the title company to record the transaction with the county. Once recording numbers have been released, you are the official owner of the home and are entitled to the keys. Keep in mind that the funding process usually takes 24 hours. This means that if you want to move in on Friday, you must sign by Thursday.
Congratulations!!! You now own the home and are on your way to achieving the American Dream.
Copyright © 2007 Mead/Taylor Financial Group