What are the steps involved in the home mortgage process?

Every home mortgage process is a little different, but nearly all loans follow this same timeline of events.

Here is a quick overview of the steps nearly all loans will follow before the mortgage officially closes. 

1. The Application: In order to begin the loan process, a prospective borrower must first fill out an application.  There are three typical methods to complete this portion of the loan process; an online application, a face-to-face interview or a phone interview. Most of the information contained in the application is something a borrower would know off the top of their head, but some things require extra research.  
2. The Documentation Stage: In order to close a mortgage quickly and efficiently, it is imperative that the borrower follows up the application with the supporting documentation. Any delay by the borrower in gathering documents at this stage delays the entire loan process. The list of documents required varies greatly depending the circumstances of the borrower. Some mortgage professionals will collect only the bare necessities at this stage of the process to push the loan forward, while others proactively request everything they know will eventually be required at some point in the process. I personally believe it is best to provide as many relevant documents as possible upfront to lower the possibility of last minute issues or rushes.
3. The Appraisal & Title Work: The next step in the process is to order and schedule the home appraisal and title reports. On a home purchase, the borrower is rarely involved at this stage beyond providing payment information for the appraisal. On a home refinance, the borrower works with the appraisal professional to schedule a time to inspect the home. The appraisal can be one of the more time consuming portions of the process, so it important to schedule it as quickly as possible. The title work is also ordered by your mortgage professional or his/her team during this step of the process. Borrowers are usually not involved in the title report step unless an urgent issue arises on the preliminary report.  
4. The Loan Approval: When the loan is ready, it is packaged up and submitted to the underwriter. The underwriter may or may not work for the same company as the mortgage professional depending on the type of company he/she works for. The underwriter is the person who approves, suspends, or denies the home loan. Many loans that reach this step are eventually approved because experienced mortgage professionals only submit loans they believe will be approved. There are two types of loan approvals: 
• Conditional approval means that the underwriter requires a few more items to fully approve the loan. Assuming those conditions are met, the loan is acceptable. The conditional loan approval may require items from the borrower, title company, appraiser, or processor. Please see my article here regarding the roles each person plays in the process. 
• Final Approval (referred to as "cleared to close") means that all the conditions have been satisfied and the loan is ready for the next step.
5. The Loan Documents: Once the loan is finally approved, the loan documents are transmitted to the title company. This typically happens by email, so it is almost instantaneous. The title company then prepares the preliminary settlement statement (known as the HUD statement) and sends a copy back to the lender for approval.  
6. The Signing: Once the lender has approved the HUD, it is time to schedule the signing of the final paperwork, including the new note and mortgage. Up until this point in the process, nothing a borrower has signed is a binding lien on the property. The fees at the signing are no longer estimates, they are actual closing figures. After the signing, the loan documents are transmitted to the lender. For a purchase, upon receiving the executed closing documents, the lender releases the money to complete the transaction. For certain refinance loans, this will begin the three day right of rescission period, in which the borrower has three days to look over the documents. After this three day period, the loan will be completed.
7. The Funding: This is the day everyone has been waiting for. Once the lender has released the funds, the title company disburses them to all parties per the settlement statement. For purchase loans, this is when you finally receive the keys to your new house and the seller receives any monies due to them. For refinance loans, this is the date that existing liens or debts are paid off and/or the borrower receives any cash back.

That is the basic flow of mortgage loans. The process may appear daunting, but many of the steps are done behind the scenes by the professionals involved in the transaction without borrowers having to worry about them. The more research a consumer does upfront finding true professionals, the quicker and smoother everything is throughout the process. 

Please feel free to contact me with any questions you may have regarding the loan process. 

Thanks for reading my blog!

Website: Mortgage Rates in Arizona

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