Pre-Qualification
The first step in the mortgage process is the pre-qualification. This initial contact with the lender is where basic information about the income and debts of the borrower is gathered and a financial determination about how much house the borrower may be able to afford is given. Different loan programs may lead to different values, depending on credit history and income, so be sure to get a pre-qualification for each type of program you are suited for. This stage takes about 15 minutes and is usually handled over the phone.
Application
The application is the next step of the loan process and again can be done over the phone. The buyer, now referred to as a "borrower", completes a mortgage application with the loan officer and supplies all of the required information regarding income and assets. Permission to have a credit report is given. Various fees and down payments are discussed at this time and the borrower will receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) within three days that itemizes the rates and associated costs for obtaining the loan. The file may also be submitted to an automated underwriting system. This will allow the lender to give out a pre-approval letter to the borrowers real estate agent acknowledging how much the borrower qualifies for.
Processing
Processing occurs between days 5 and 20 of the process or immediately after the borrower signs the initial "small stack" of disclosures. The "processor" reviews the credit reports and verifies the borrower's debts and payment histories as the verifications (VODs and VOEs) are returned. The processor also orders the appraisal and titlework and checks for property issues that may require further discernment. The processor's job is to put together an entire package that may be underwritten by the lender.
Underwriting
Lender underwriting occurs after the file is processed and sent to the investor or lender. The underwriter is responsible for determining whether the combined package compiled by the processor is deemed as an acceptable loan. If more information is needed, the loan is "conditioned or stipped" and the borrower is contacted to supply more documentation by the processor or loan officer.
Closing
Closing is the final step in obtaining a mortgage loan. At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the selling party in exchange for the title to the property. This is the point at which the borrower finishes the loan process and actually buys the house and signs the final loan documents. Common items to bring to closing include a photo ID, the money for down payment and fees, and a recent residence history for the title company.
