The Mortgage Process
Step One: Application/Pre-Qualification
The process begins by filling out a loan application with a mortgage originator (aka a loan officer). The basic information needed for this is: Name, SSN, date of birth, present address and address history, present employer and employment history. The application will also inventory your available liquid assets (checking, savings, retirement etc) as well as your "documentable" income (W2's + paystubs… or full tax returns for the self-employed- we'll get to this later).
Once the application is received, the loan officer will pull a credit report that will take a snapshot of your current debt obligations, as well as get a sense of your relationship to that debt with the associated credit score.
With this information, we can now determine what size loan the borrower would qualify to borrow. This amount is mostly based on a "debt to income" calculation, where we make sure the borrower does not exceed a certain amount of monthly debt payments (including the new mortgage obligation). We determine what monthly payment would be the maximum allowable, and based on the available mortgage rate back into what size loan that translates to.
This borrower is now Pre qualified for a real estate purchase!
Step Two: Documentation/Initial Underwriting
So now that you are shopping for a home, we will want to have total confirmation on proving that income with some supporting documentation.
I mentioned earlier that we are looking for "documentable" income, and the adjective "documentable" is key here, as mortgage approvals are based only upon what can be proved on paper. This proof must be on the same level as what is submitted to the IRS. Generally for normal salaried/wage earner borrowers the W2 and paystub is completely sufficient to prove income. But for self employed the full tax returns are important, we can only give you credit for your adjusted AFTER EXPENSES income. A Profit and loss statement, or a 1099 is not admissible for the purposes of loan approval, only filed personal income tax returns will do (for self employed).
So once the proof of income is established we submit the file to processing where it is prepared for underwriting. The processor will organize the file in such a way that makes the underwriting decision as quick and easy as is possible. The underwriter is the judge and the jury for your loan approval. The underwriter makes sure that all the loan guidelines are appropriately met, and at this point in the process will create a list specific to this borrower of additional documentation needed to create a complete and fundable file.
Once we have this list the borrower is now "conditionally approved". So this means the underwriter has seen the file and it so far fits within guidelines, but more documentation is still needed.
Step Three: Property approval
So now this borrower is approved, but we are waiting for an offer to be made and accepted. Once this happens, we gather specific info about the property. We do this with a title report, and an appraisal report. The title report just confirms that we are in a position to make a clean and legal transfer of ownership. The appraisal report confirms that the home is in working order, and worth the price that has been agreed upon.
Step Four: Final Loan approval
Once all the property reports are in hand, as well as the additional list of items required from initial underwriting, the file goes BACK to the underwriter for final sign off. At this point, the underwriter could fully sign off on the file as ready to fund, or possibly ask for additional clarifying documentation. Sometimes the documentation provided, is insufficient or raises more questions or need for an additional document etc. This is not that uncommon, and we just provide what is needed at this time to get that full sign off.
Step Five: Loan Docs go to the title company
Once we have full sign off or "cleared to close" status, our funding department creates the paperwork for the borrower to sign. The paperwork is sent to the title/escrow office where the borrower will go and sign on the dotted line (100+ times!). Here you sign the trust deed, and bring any remaining cash needed to pay for down payment and closing costs.
Step Six: Loan funding/close of escrow
Once you've signed the note and trust deed and all assorted mortgage disclosures, we will wire the balance of the mortgage into your escrow account. This money will be dispersed to the seller, payoff any existing liens on the property, and then it will become your new mortgage balance! The trust deed will be sent to the county courthouse and registered with you as the owner and bound to the rules of the mortgage with the lender. At this time, Bob or Greg from the Portland Real Estate Cafe team will drop off the keys to your new home!
If you have any additional questions about the mortgage process, or to schedule a time to find out how much YOU qualify to borrow, please contact me directly at:
email@example.com 503-488-1823 - direct office number
or visit one of my websites:
The content relating to real estate for sale on this site comes in part from the IDX program of the RMLS™ of Portland, Oregon. Real Estate listings held by brokerage firms other than Keller Williams Realty Professionals are marked with the RMLS™ logo, and detailed information about these properties include the name of the listing's broker. Listing content is copyright © 2013 RMLS™ of Portland, Oregon.
All information provided is deemed reliable but is not guaranteed and should be independently verified.
Listing information last updated on December 8th, 2013 at 12:15am PST.