The Loan Process
1. Gather your documents 
Start by gathering all your financial documents, such as W-2s, recent pay stubs and bank statements. These will help you be more accurate with your loan application as well as create a stronger pre-qualification. Now is also a good time to analyze your household budget, if you haven’t done so already. Look at all your income and all your expenses to decide what monthly payment you feel comfortable with. You can also use my free finance tools to help you do this.
2. Get pre-qualified 
Ask your agent for a referral to a local lender. It’s important to select a mortgage consultant who works in the city or county you plan to purchase in, because local customs can vary even within a state or region. Speak to a loan officer about your income, debts and credit to establish a realistic price range and to understand how much you payments are likely to be. Ask these questions:
1. Are there any different loan programs or down payment assistance programs available to me? This will help you see which program is the best fit for you.
2. What is the mortgage consultant’s or company record for funding loans on time?
3. Do you have any sort of written guarantees, like a Closing Guarantee? This will reassure you that your loan will close on time and your closing costs will not increase.
4. Ask for a Good Faith Estimate (“GFE”) to compare closing costs and payments. This is the most important question. If a lender does not want to give you one or hesitates when you ask, find another lender!
A Good Faith Estimate will also help you shop interest rates and fees. To do this, get all your GFEs together in front of you, and sit down to call all the lenders at the same time on the same day. Ask them what your interest rate would be today, and write that number down at the top. Then compare what the lender is charging you in fees to obtain that interest rate. Your mortgage consultant or real estate agent should be able to help you look at GFEs to know what fees are lender fees, and which fees are ordinary closing costs beyond the lender’s control. Bear in mind that rates change daily, so anticipate some fluctuation until you find the right home. Shopping for a loan is not just about the best rates and fees. Customer service is a huge aspect, because a real estate transaction is very time-sensitive. If your lender is not doing the right steps on time, they could jeopardize your transaction, or at the very least, add stress that you simply don’t need!
Also, some lenders have started charging fees up front just to take your application. There are plenty of lenders who do not do this, so shop around with lenders who do not charge first. Ready to get started?
Click here for a free, secure application with Sunstreet Mortgage for a pre-approval.
3. Lock it in 
Once your offer on a home has been accepted, your interest rate will be locked in. If there are any new or additional pay stubs, bank statements and tax returns, your lender will require these too.
4. Get it appraised 
Your lender will order an appraisal on the property to verify the price you and the seller agreed upon is supported by recent sales. You will likely have to pay for this fee in advance. If the appraisal comes in less than the purchase price, you may be able to renegotiate or cancel the contract. If it comes in higher, you just got a great deal!
5. Underwriting 
Your file will be sent to underwriting, which is the final approval process. Every loan must go through underwriting to make sure there are no inconsistencies and that the loan meets all the guidelines. Sometimes the underwriter will require additional documentation at this stage, so be prepared to send it promptly.
6. Sign documents 
This is a step where it is very important to not only have a lender who is giving you a good rate, but also good customer service. The lender will send documents to the escrow company for you to sign no later than 3 days prior to close of escrow. If they don’t, there is a chance the seller could cancel the contract and take your earnest money. This is not meant to scare you, but rather just make you aware how important it is to have a good lender on your side.
Bring a copy of your final Good Faith Estimate to your signing appointment to double-check for inaccuracies. Make sure you understand what you are signing, and if you have questions, now is the time to speak up. This is also when your down payment and any closing costs will be needed.
7. Loan is funded 
Once the documents are fully signed and initialed, the lender will release the funds and the deed will be recorded. You are now a homeowner!
Still have questions about the loan process? Email a mortgage consultant:
