Buying a home is a detailed process with many moving parts, you can use this home purchase mortgage checklist to be best prepared. To summarize there are five major steps in the mortgage process. The actual home loan process can seem intimidating and at times intrusive especially for inexperienced buyers. We’re here to help you through the process and educate you on what can be expected from start to finish. Of course your mortgage lender is your best resource for questions throughout the loan approval process.
Home Loan Approval Checklist and Process
The main points of the process are listed below, this list is not meant to be inclusive of all items but a summary of items you can expect through the process:
Be Prepared, Don’t Put the Cart Before the Horse
Many people dive into the process of purchasing a home and more specifically looking at homes before they even know what they can afford. Real estate agents that participate in this behavior create false hopes for their clients. After all if you’re being shown properties you love but can’t afford how would you take that? Many clients view this as a waste of time so you’ll want to get approved BEFORE looking at properties for sale. When buying a home there’s two things to consider, purchase price and monthly payments. Some people might receive an approval to buy a home for $500k but the approval doesn’t necessarily mean the buyer can or wants to afford that payment. Use our home purchase mortgage calculator on any of the properties we have listed on our site to see what you can afford in a monthly payment
The Nitty Gritty
Now that you know what needs to be done first, lets talk about the actual first step in the loan approval process. The home purchase mortgage loan application is the start of it all, you can download a blank application here so you can familiarize yourself with the application form. Along with the actual loan application also referred to as a (Ten-O-3) 1003 you’ll be asked to provide certain documentation. Getting this information together and available to turn in when you have a meeting with the lender will help expedite the loan approval process. The items needed may include but not be limited to proof of employment for the past two years, proof of income, length and proof of current residency and obviously your identification and social security card. One term in the approval process you may hear is debt to income ratio or DTI, the lender will use the DTI along with your credit score and the other supplied information to establish the approval amount based on your current debt load.
Home Purchase Mortgage Frustrations
Loan Application Review
Once all the requested documentation has been supplied to the mortgage lender, they’ll submit the packet for final underwritten approval. Final underwritten approval means the loan packet and paperwork has undergone the scrutiny of the underwriter and all items and statements on the loan application check out. Many times even after all paperwork has been submitted to the lender a underwriter will request further documentation or items to support or further explain items stated on the application. These additional items are defined as “conditions to approval” and can be a bit frustrating as the condition requests can come more than once during the review process. During this time do not become frustrated, you’re almost done with the loan approval process. Upon approval from the underwriter your loan is then truly approved.
Considering you’ve received an underwritten approval, now all you need is a property address and likely an appraisal which will be required by the lender as an additional condition for approval. The property address will come in the form of a purchase agreement and the appraisal if one is required will be requested directly from the lender. Upon completion of these two items you’ll be in a position to sign loan documents. Loan Documents or loan docs will be a packet with all the information for your loan including term, interest rate, etc. Once all loan docs have been signed and sent back to the lender you’ll be ready for closing.
Congratulations! You’re ready now to close on your new home. All that’s left is for the lender to fund the loan based on your loan docs and for the title company to record your deed of trust. The deed of trust is a public record on who owns the home and once recorded, that’s you!