The financing process
- Complete the loan application.
This is the most important step. The information can be gathered in person or over the phone. Now is the time to disclose all material financial data, and discuss financing options available. The quality of this meeting is essential to a smooth loan approval. An application fee may be required by the lender.
- Order supporting documentation
Immediately following the application, supporting documentation is ordered. This includes credit reports, verifications of deposits, income, and mortgages. Certain other documents will be requested: W-2’s, pay stubs, bank statements, etc. The lending institution requests an appraisal of the home, a credit report and verification of employment and assets, such as bank accounts. While awaiting the return of the verifications, both realtor and borrower will receive weekly progress updates.
- Loan cost estimate
The lender will provide a booklet containing specific loan information and a good faith estimate of closing and related costs. An estimate of your loan costs, in the form of an Initial Truth in Lending Disclosure Statement (Reg Z), is issued.
- Lender evaluation
The lender evaluates the application, along with supporting documentation.
- Loan approval
Pop a cork! The loan is approved. All parties are notified. Any further conditions required by the lender are handled at this time.
- Loan documents
The lender will draw loan documents and send them to the Title Company or Closing Attorney for final signatures.
Sign closing documents. The signed documents are returned to the lender. After review, the loan is funded (funds sent from the lender to the Title Company or Closing Attorney or Closing Attorney).
The lender disburses the funds to the settlement or closing agent. Seller is paid, and title to the home is yours.
Appropriate documents are recorded at the county recorder’s office.