Applying for a mortgage should be simple, so why does it often seem so hard? Well, the answer is 'it doesn't have to be'. Knowledge is power, so we broke down the ins and outs of the mortgage process for you.
Here are the steps you can expect when applying for a mortgage.
Pre-Approval (about 20 minutes)
If you’re purchasing a home, you’ll want to seek a pre-approval for a mortgage first before contacting a Realtor and looking at homes.
The important piece here is that getting pre-approved allows you to know what your purchase power is when home shopping and it also helps you obtain a pre-approval letter so that your Realtor and the seller know you are backed by strong financing when making an offer.
- Tax Returns
- Photo ID
- Bank Statements
If you are refinancing your home, this process will be very similar but you will also need to send your lender your current mortgage statement and your declarations page showing proof of your homeowners insurance.
Initial Disclosures (about 5 minutes)
When you have found the home you want to buy and have a fully executed purchase agreement, you will give it to your lender so they can lock in your interest rate and submit your application. In order to do that, they will need you to sign your initial disclosures. This can be done online and takes about 5 minutes.
Keep in mind, you are not obligated to anything within the loan at this point. By signing these disclosures, you are telling the lender that you have viewed them, and are verifying the accuracy of the information you provided for your application. You are also giving your intent to proceed with the submission of your application to underwriting.
Appraisal (3 day standard)
Whether you are purchasing or refinancing a home, you will most likely be required to obtain an appraisal. Your lender will order this for you. The appraiser will call to schedule a time to come out and appraise the home and once they do, it typically takes about 2-3 days for them to return their full report. The appraiser will need access both to the outside and the inside of the home.
Processing and Underwriting (2-4 weeks standard)
Once your appraisal is received, your processor will organize it and all the documents you have provided in the file and verify that everything looks correct. Then they will submit your loan to underwriting.
An underwriter will go through your file with a "fine tooth comb" to ensure that everything looks correct and all the guidelines are met for your loan investor (ever heard of Fannie and Freddie... we will save that for a different blog). Your underwriter is basically here to make sure your loan is extra legit.
Underwriters come back with a list of conditions that need to be met in order for your loan to be considered Clear to Close. The your loan is passed back to your processor. They will take this list of conditions and will contact you to gather any further documentation on income or assets, if needed. Once completed, they will order your title work.
The processor will verify that they have completed everything on the underwriter's list and resubmit your file to underwriting for final approval.
This stage of the process relies heavily on the cooperation of the borrower (that’s you!). It may seem like it is all behind the scenes, but the best thing you can do is to respond to requests as quickly as possible to ensure timely closing of your loan.
Preparing for Closing (3 day standard)
After all that processing and verification of documents is complete, the underwriter will officially sign off on your loan by giving the MLO the official “Clear-To-Close”. At Ruoff Home Mortgage, we issue an automated Milestone Update letting you know once you have clear-to-close so you aren’t left wondering.
All borrowers, whether purchasing or refinancing, are going to come into contact with the Three-Day Closing Disclosure Rule within their transaction. This rule states that as a borrower, you must be able to view your preliminary closing disclosure 3 business days before closing.
This document can be delivered to you in a number of ways, your originator will walk you through how you will receive it (whether US mail or electronically). Once you have viewed this document, your 3 days have begun and you will get another Milestone Update with Ruoff showing your Earliest Possible Closing Date highlighted in bright yellow.
Once we know how soon we can close, your originator will work with you, the title company and your Realtor if necessary to schedule your closing appointment.
Expedite the Process
As you can see, in theory – this should be a fast process, only taking about 30 business days from start to finish. What can hold up the process, however, is the timeliness with which the loan originator is able to acquire necessary documentation in order to push the loan through each necessary step at the right pace.
Unlike Ruoff Mortgage, most other lenders do not process or underwrite their loans in-house. Because of this, Ruoff has an unbeatable 17 day process from the time you send in your application to the day of closing.
Here are 3 basic tips for things you can do to make your home financing a breeze from start to finish:
1. Respond quickly to each documentation or information request your originator makes of you.Your originator is working with multiple borrowers at any given time and would not reach out for information unless it was absolutely necessary.
2. Complete all paperwork thoroughly and cleanly. Sign, initial and date in all the right spaces and make sure you’ve followed all instructions on any paperwork asked of you.
3. Be transparent with anything you think might affect the success of your home financing, whether past or present. Your originator needs to know things like whether or not you have experienced a foreclosure in the past, if you are ordered to pay child support or if you’ve recently deposited any large sums of money into your account and where they are sourced from as well as a lot of other imperative information. They will ask these questions up front in your application and the best thing you can do is answer fully and honestly so that your originator can take the proper routes to get you on the quickest path to the home financing you desire.
Like we said, applying for a mortgage should be simple! At Ruoff Home Mortgage we make it easy and speed up the process with a step-by-step platform that allows us to process your application in a streamlined fashion. That means your mortgage process is done even faster.
Remember, your originator wants to see you successfully close and at Ruoff our goal is to help you reach your home financing dreams quickly, seamlessly and with exceptional customer service!
Are you ready for a fast and simple mortgage solution? Apply online today!