Six Stages to Closing on Your New Home!
The loan process is broken up into 6 parts: Documentation, Appraisal, Underwriting, Conditional Approval, Clear-To-Close, and finally the Closing.
What You’ll Need To Start
- W2’s – From the last 2 years
- 1040 Federal Tax Returns – From the last 2 years
- 2 Most Recent Paystubs
- 2 Most Recent Bank Statements – All pages
- Copy of your drivers license
There most likely will be other documents we will need from you throughout this process, but these documents will be required to start your loan process.
During this stage, it is critical that you don’t change any aspects of your financial picture. This means:
- No Major Purchases (i.e. Purchasing furniture for you new home)
- No Applying for New Credit (i.e. Obtaining financing for car, dirtbike or motorhome)
- No Change in Employment (Please DO NOT QUIT YOUR JOB! Changing jobs can be a bad idea. Speak with a lender before making any major decisions) Download our Do’s and Don’ts Checklist.
A licensed 3rd party Appraiser will estimate the value of the home you are about to purchase. This is meant to ensure for you, and your lender, that the home you are buying is worth the price that you have offered.
The most common method used by an Appraiser to determine your homes value is to compare it against recently sold homes in your neighborhood; typically over the last 3-6 months, depending on the market and location of your property.
If you are getting a government backed loan, such as an FHA, RD or VA, then those appraisals are much more detailed. The appraiser will be looking at the condition of the property for health, fire and safetly issues like exposed wood, paint, missing handrailings, deck heights, life left on the roof, firewalls, and much more. We advise all of our clients to get a home inspection with a reputable inspector, and if you are working with a Realtor, let them know what loan you are pre-approved for so they can better assist you through the process and negotiations.
During The Underwriting Stage, our Loan Processor reviews all the submitted documentation that you’ve provided and then turns it over to our Underwriting Department. The Underwriter is responsible for performing three critical tasks:
- Organization – underwriter will compile and organize your documentation into a mortgage-ready file.
- Qualification – underwriter will reconstruct your scenario to ensure it meets our qualification requirements and guidelines.
- Verification – underwriter will verify that all information is accurate and authentic.
It is not uncommon for Underwriters to request additional documentation, so please do not be alarmed or discouraged if this happens. Instead, be sure to accommodate these additional requests as quickly as possible. Not producing documentation in a timely manner can have a great effect on receiving your conditonal approval and moving towards closing. Time is of the essense!
This is an exciting step in the process! During The Conditional Approval Stage you receive the first indication that your mortgage loan will be approved by us, as it’s been initially reviewed by the Underwriter. Although, this approval is only valid if certain conditions requested from the our company are met. These conditions may include:
- Additional Documentation
- Letter of Explantation
- Acceptable Appraisal Report
Once you have met all the required conditions requested, your file will be re-submitted to your underwriter for final approval. Everytime we “re-submit” it can add days to the process. Please be as organized and prompt as possible, so we can help you stay on track to close on-time.
We are almost there! During The Clear-To-Close stage the Underwriter double checks that all documentation has been provided and all conditions have been met. Once we receive the “clear-to-close,” then we will prepare the documents for closing and reach out to you, or your real estate agent, to set the closing date and time.
CONGRATULATIONS! IOn closing day you will be signing the final documentation, signing your title documents, and receiving the keys to your new dream home! Closing day is an exciting time and one of the best parts of our job. Helping people reach their goals of homeownership, with as little hassle as possible, is what it is all about! Life Is Complicated. Homeownerhip Shouldn’t Be.
Ready to be Pre-Approved?
Ready to be Pre-Approved?