I’m getting a mortgage – what’s the process?
Homebuyer basics

I’m getting a mortgage – what’s the process?

As we quickly leave behind the dumpster fire of 2020 and move into the hope of something better, MANY are purchasing homes! Whether it’s the newly found option of WFH (work from home) or it’s just time to refinance and reduce expenses or take cash out to refurbish, you likely have questions about what happens behind the scenes of moving your loan from application to closing/keys and first payment. Here’s a quick synopsis and if you have questions, you can always reach out by email or phone for more details.

  1. Application: This can be done in person, over the phone, by snail mail or most common today is online. You will note on the front page of my site there is a big “Apply Here” button and that will put you right into a private portal that sends me the loan application so I can review and start down the trail of where to place your file.
  2. Credit report: Probably your lender will collect money for this – up to $60 or so to run what is called a Tri-merge. It is a merge of all of the current file from each of the credit bureaus – Transunion, Equifax and Experian. This will include a score from each as well. Typically the middle score is used to determine pricing and qualification. If there is more than one borrower, then it will be the lowest middle score of all applicants. If for some reason one or more only have two scores, which happens for borrowers that don’t have a lot of credit, then it will be the lowest of two scores. Should there be no score or only one score then you will be instructed on what it will take to create a non-traditional credit file. You should receive a consumer copy of your credit report to review. If you see errors, this is the time to start addressing them. Your mortgage professional can direct you on steps to clear up errors.
  3. File review: if there are things that need clarification you may be asked for some documentation. For instance, if you are self-employed, I would ask for some documentation to support your income before I run an automated underwriting scenario. This helps insure that the number being used for your income can be documented and supported.
  4. Automated Underwriting: Once numbers and options seem comfortable based on the items in the fully completed application for credit then the automated system is used to come up with a preliminary approval. The program typically determines the system that will be used. It will return preliminary findings that will provide what will further be needed when submitting the full file to the underwriter.
  5. Registration with a lender: Your loan will be registered and you will receive a stack of documents to sign at this point as this is a formal loan application. This usually happens if you have a property identified, though sometimes a submission for a pre-approval will trigger this as well. These will include a Loan Estimate that will help you understand your costs associated with the type of loan you are requesting.
  6. Submission of all required documents: All items required on the automated approval are collected from the borrower and other places such as the title company or other verifications and submitted to the lender for their review. Should they have questions or need further documentation, these will come out in the final conditions.
  7. Appraisal: one of the conditions of the automated underwriting will require what type of appraisal will be required for the property. Sometimes there is an appraisal waiver and none will be required and other times a full appraisal that includes an interior inspection or a drive-by may be the situation. This is typically ordered at the borrower’s expense and may take any number of days depending on the area and timing. On a refinance, the appraiser will contact the homeowner to set a time and on a purchase, the listing realtor is generally the contact and an idea of timing can be received at the time of contact.
  8. Submission of final documents to underwriting: This will be anything required by the underwriter the first time through and all of the documents that are needed to clear all of the stipulations and conditions of the loan. Once these are clear, the lender will issue the Clear to Close and the Closing Disclosure (CD). The CD gives you the final look at actual costs and while a few things may change, not many.
  9. Documents: are then drawn and sent to escrow. Escrow will call you for an appointment. If there are funds due from you – this is typical in a purchase, then you will be provided with payment instructions.
  10. Signing: Once signed, those docs are returned to the lender for final review. When all is clear, escrow will balance their numbers with the lender and an OK to record documents will be given. Public record is then made of the Deed of Trust and any other affiliated documents. Funds are then disbursed to all parties.
  11. Final steps: If you are receiving cash out on a refinance, then you will receive funds at this point or on a purchase – keys! Look through and review the documents you were given at closing. They are important and you should know what you have. Included is usually a first payment letter. Pull this and put it with your bills in the event that the new lender doesn’t get a payment out to you right away. This way you will know where to make your first payment and how much.
  12. Payments: Some lenders keep the servicing on their loans and others sell it. You will be given a document at closing that tells you a percentage of how likely it is that your loan will be sold. If you are sold, they will contact you and provide you with payment information. Usually your first payment is the month following the month after you close. If you have any concern, check your papers or talk with your mortgage professional.

Kristin M Eklund NMLS #1872091
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