Things you should know about the Loan Process:
Our office will be sending you “Initial Disclosures” within 3 business days of us receiving your Residential Purchase Agreement. THESE DISCLOSURES ARE NOT YOUR FINAL NUMBERS. These are the numbers we are required to disclose to you so you know the estimated rate/fees for the transaction. The return of the disclosures to our office is the official starting of the loan process. We cannot move the loan forward in the loan process without your signature on the forms and the forms returned to us.
Your Appraisal will be ordered when we get the Initial Disclosures signed and returned to our office and the loan goes through our internal setup process for Underwriting. This setup process will take a minimum of one business day from the receipt of the disclosures. If you have a short due diligence time frame it is imperative that you return the disclosures and the Credit Card Authorization for the Appraisal to our office in a timely manner.
We understand the sending of paperwork to the loan company is the most unpleasant thing about the loan process. Please understand our goal is to make the process as simple and effortless as possible. That being said, our intent is to request all the documents we believe the Underwriter will be requiring so we have fewer times to come back to you requesting more paperwork. It is important to know that many times when we present a document to the Underwriter it creates additional questions requiring additional items. Each time we request paperwork from you, we will do so by email so that we have a time and date attached to it. Please check your email regularly during the loan process so that our communications with you as timely as possible.
Underwriting Turn Times – Conditions
When your paperwork gets submitted to the underwriting department the file goes into an underwriting queue. That queue simply takes the loans on a first in/first out basis. Knowing this if the loan gets started near the end of the month when loan volume is high, if the interest rate environment is low, or if there are major holidays in the very near future, the turn times will be longer than the normal. The loan process takes a minimum of 15 business days (3 weeks) if the loan file is perfect and everyone does what they are supposed to do in the time frame they are supposed to do it.
On a typical purchase transaction there are a minimum of 15 people involved in closing your transaction. 1) Buyer’s Real Estate Agent, 2) Buyer(you) 3) Seller’s Real Estate Agent, 4) Seller, 5) Home Inspector, 6) Loan Originator, 7) Loan Processor, 8)Underwriting set up, 9) Underwriter, 10) Underwriting Assistant/liaison, 11) Appraisal Management Company, 12) Appraiser, 13) Escrow Officer, 14) Title Officer, 15) Escrow Assistant, 16) Title Company signer/Notary, 17) HOA company, 18) Loan Document drawer, 19) Funder, 20) Escrow courier (for recording).
One of the biggest hindrances during the loan process is a change to the Borrower’s credit profile. Please make sure that you DO NOT apply for any new credit, notify our office of any letters from a Collection Agency you receive, do not pay off or negotiate any collection accounts without our input, and do not “dispute” any accounts on your credit report during the mortgage process. Any changes to your credit profile, even if you might feel they would reflect positively, will change the integrity of your mortgage loan characteristics and will result in delays of your loan. Believe it or not, the one single problem in the underwriting process is “undisclosed debt”. Any time an Underwriter feels there is additional debt that was not disclosed on the loan application, there will be much added challenges in the underwriting process.
Bank Accounts/Asset Statements
Deposits made to your asset accounts will need to be “sourced and seasoned”, meaning the Underwriter will require a paper trail of the deposit. We understand that your bank account is your money and is no one else’s business, but during the loan process it becomes everyone’s business. Because loan guidelines are left to the interpretation and discretion of an Underwriter, know that the Underwriter will ask you to account for not only deposits other than your normal payroll deposits, but also ask about any checks/withdraws that might seem out of the ordinary. One of the conditions to close the file at the end of the transaction will be to provide proof that the closing funds are from the same accounts you disclosed loan process. Also note that as of October 2009 the “Nevada Good Funds Law” went into effect, meaning Title Companies will require closing funds in the form of wire transfer only. You will not be able to bring certified funds in the form of a “cashier’s check” to close your transaction.
When your loan conditions have been cleared to the point your rate is locked and loan documents have been requested, that does not always mean the loan process is complete. Many times we are able to have your loan documents sent to the Title Company for signing, but there might be items that still need to be completed. Our ability to get your loan documents to the Title Company early is truly an attempt to complete the transaction in a timely manner. When you sign you will need a copy of a valid ID for the Notary Public at signing. Additionally you will be required to sign your loan documents exactly as your name appears on the loan application. If you want your name different from what we are using for the loan purposes please notify us so we can make the changes. When you are finished signing your loan documents, the Title Company representative will give you wiring instructions for your funds to be electronically submitted as well as the amount required.
When the loan documents are returned to the Lender from the Title Company, it will take 24-48 hours for the loan to fund from the receipt of your loan package. To explain the funding process might not be that interesting, following is a brief explanation of the process:
1) The documents are over-nighted to the lender.
2) The package is opened and rushed into a “Funder” whose job it is to look over the final Settlement Statement and make sure the numbers are all correct, look through the documents and make sure all signatures are complete and signed as requested, verify the Notary Public properly notarized the documents, verify the final conditions are signed off by the Underwriter.
3) The Funder figures the file and contacts the Title Company so they can “balance the funds needed by all parties.
4) The Funder normally has “funding conditions” they will email to the Escrow Officer and the Loan Processor. (These conditions must be met, checked and verified by the Funder).
5) The wire to fund your loan is ordered. There is no way to describe how much happens in a very short amount of time during this process…but many times a Funder will have up to 25 loans in one day and usually has just over 1 hour to complete all the fundings they have that day.
Closing of Escrow
The “Close of Escrow” is the time the Title Company’s runner notifies the Escrow Officer your loan has recorded with the County Recorder’s office & the Title Company can “close your file”. This is when you will be notified and you are able to get the keys to your new home.
We hope this breakdown of the Lending Process is beneficial so you know what is to be expected by everyone working to make sure we get you into your new home as efficiently as possible.