For people looking to buy a new home or refinance an existing one, the mortgage process can come across as being anything but straightforward and easy to understand. Some people feel vulnerable while their credit history, employment status, and financial standing is dissected by banking institutions to determine if a mortgage loan will be granted or not. So, what really happens behind the scenes of the mortgage approval process?
The moment you have found the right lender and determined a suitable loan program, the first thing you need to do to move forward with your mortgage approval process is to fill out a loan application form. More often than not, the application is uploaded to an electronic approval system that compares the items in your application to qualifying criteria that the loan you have chosen requires. Assuming you meet the standards for the loan approval by showing an acceptable debt-to-income ratio, down payment, assets, etc., an automated pre-approval is generated.
Provided you have abided by all laws and provided a truthful application, all you need to is provide the information the loan system or lender requires, such as W2 forms, bank statement, pay stubs and tax returns. You will also have to produce documents that will testify to your identification such as social security number, driver’s license, and birth certificate. It is advisable to have these documents ready for checking and verification of your identity. After these documents have been collected by the lender, your application, along with applicable loan disclosures, is submitted to an underwriting.
Underwriting your loan
Once your loan application reaches an underwriter, they will validate your documentation. If everything checks out, it is typically no more than a few hours before your file is out of their hands and conditional loan approval is granted. Of course, your file could also be suspended or denied and returned to the mortgage loan processing department with a statement of denial, but we will assume all is well for this guide.
Once the conditional loan approval is granted, you now have to provide more documentation that the underwriter needs to grant final approval. The might want more items like an updated pay stub, a letter of explanation for something on your credit report, written verification of employment from your employer, etc. Once again, when you provide this documentation and submit it to your loan officer, it might take another day or more for the underwriter to review the items.
After you have completed the loan application, survived the endless requests for additional documentation, and received your final underwriting approval, you now need to navigate your way safely through the loan closing process. With the end of the process in sight, you need to sign Jason Vondrak Company President Prospect Financial Group 948 Garnet Avenue San Diego, CA 92109 NMLS: 349089 | BRE: 01837707your closing papers. If all things work out, you will get a mortgage loan.
If there is one thing you should know when refinancing or purchasing a home, it is that the whole process usually takes time. There are several entities involved in the transaction that add to the mortgage process and its seemingly grueling duration. There is the lender, the loan officer, the borrower, the title company/escrow company, and insurance company. Keep these things in mind and accept the fact that the process is drawn out by nature; only then you can calmly proceed through your mortgage loan process with confidence.
Prospect Financial Group
948 Garnet Avenue
San Diego, CA 92109
NMLS: 349089 | BRE: 01837707
Jason Vondrak has been in the mortgage industry since 2004 and co-founded the mortgage brokerage Prospect Financial Group in 2006 in San Diego, California. Today he serves as President and CEO of Prospect Financial Group and the president and founder of Prospect Property Group, a real estate development company, established in 2012.
“I’ve had the privilege to serve in an industry that exists to ensure homeownership remains among the top priorities of government and citizens alike. Over the years, it has been a pleasure working alongside homeowners, real estate professionals, and business associates combining efforts and teaming up to help homeowners realize the dream of home ownership.”