Step 1 - Starting Your Mortgage

What to Expect:

If its a purchase mortgage the first step is for us to receive your purchase contract.  
If its a refinance the first step is to confirm you want to move forward with a refinance after getting a quote from the loan officer.

Our Transaction Coordinator (TC) will be giving you a call and scheduling a time for you to meet with your loan officer to review your loan disclosures.  This can be done in person, via e-sign, or by email.  The faster we can get the documents reviewed the quicker we can get on to the next step in the loan process.

Next Step:

The Transaction Coordinator will also be going over additional documents that might be needed or that might be out dated.  Bringing these documents to the meeting is very important.  This will allow your loan officer to review the updated information for accuracy.  Prior to bringing in your loan documents please be sure to read the information about cash deposits in your bank accounts. 

Possible Delays:

The longer it takes you to review your initial loan disclosures the longer your loan could be delayed for loan approval.

Step 2 - Disclosure signing date

What to Expect:

This is the date that the borrower is disclosed the terms of their new loan.  Signing these disclosures do not guarantee a loan and do not commit a borrower to going through with the loan.   They are only to communicate. The government requires the lender to send these disclosures to the borrower with in 3 days of an accepted offer or within 3 days of applying for a refinance.  

We will not be able to proceed with the loan until these disclosures are both given and also signed by the borrower.  The most important of these documents are:

• The Closing Estimate (Previously called the Good Faith Estimate & Truth in Lending Disclosure)
  • Discloses the terms of the loan. (These terms are not guaranteed until we lock in your interest rate)
• Intent to Proceed Disclosure
  • Allows us to lock in your interest rate.
• IRS Transcripts 4506 Disclosure
  • Used to request your transcripts from the IRS.
• Social Security Number Authorization
  • Used to verify your social security number. 
• Borrowers Authorization Form
  • Used to request your verification of employment & the IRS Transcripts.

Ways to sign the Disclosures:

• In person:  We recommend signing these disclosures in person so that your questions can be answered and we can talk about all the necessary requirements of the loan.
• E-signing:  We can also email the disclosures to the borrower and allow the borrower to e-sign the disclosures via a computer.
• Fax:  We can fax the documents to a fax number of your choice.  Sometimes this can get costly as there are about 100 pages of documents to fax.  
• Overnight:  We can overnight the documents to an address of choice.  

This is the 2nd step in the home buying process.  The quicker we can schedule the signing appointment the quicker we can get started on step #3.

Next Steps:

After signing the disclosures we are able to order your appraisal and submit your loan to Underwriting.

Possible Delays:

• Disclosure Signing
  • Each day we go with out signing the disclosures will be a delay in your final closing date.  This can be one of the major times delays as we can not start the loan process until the disclosures have been signed.
• Document Checklist
  • Not bringing in all of the documents that we have requested on your updated needs list could delay us from your loan closing.  This is not normally the case, however having the right documentation prior to your loan disclosure appointment will ensure a smooth closing.

STep 3 - Ordering Appraisal

After signing your disclosures we will request that you order your appraisal.  The appraisal is ordered through a 3rd party appraisal management company.  Prior to the appraiser going out to the property they will want to get paid for their work.  Below is what typically appraisals will cost in our area:

• Conventional Loans - $450 - $600
• FHA Loans - $500 - $550
• VA Loans - $600 
• Investment Property - $600
• Multi Unit Properties - $600
• Manufactured Homes - $600

What does the appraiser Look for?

The appraiser is hired to give a value to the property and also to look for any health and safety issues with the property.  They are not hired to inspect the house for termites or to inspect the home for deficiencies.  Their primary role is to give a value to the property.  If they find any health and safety issues with the property they will note it in the report and more than likely make the report "subject to repairs".  What this means is that the value is subject to repairing any health and safety item they found.  

Possible delays:

There are many ways the appraisal could cause delays.  If the market is busy there could be a longer wait for the appraiser to get to the property.  There are 2 items that we see that continuously cause delays and possibly extra costs in regards to the appraisal:

Please make sure the property has the below before the appraiser goes out to the property:

• Carbon Monoxide detector
• Water heater is double strapped to the wall

These are the most common delays that we see when it comes to appraisals. 

next STep

The next step is for your file to be sent to our underwriter and also processor for review.  

Step 4 - Submitting To Underwriting & Processing

What to expect:

This process is normally 3-4 days and sometimes sooner if we need to rush the file.  While your file is waiting to be reviewed by the underwriter there is nothing at this time needed from the borrower.  Once the file comes out of underwriting, the underwriter might have some additional questions in regards to your loan.  We will be contacting you immediately once the file has been reviewed with any requests from the underwriter.

Also while the underwriter is reviewing the file, the processor is working with your employer and with the IRS and ordering the necessary verification that we will need for closing.  Below is a list of what she will be ordering:

• Verification of Employment
• IRS Transcripts - We we don't already have the transcripts
• Social Security Verification
•  

• What is an underwriter?

   The underwriter is the individual that will be reviewing and approving your loan.  They are trained professionals that make sure your loan fits within the requirements of the government agencies (Fannie Mae, Freddie Mac, & Ginnie Mae).  The rules are set by the agencies, not by the underwriters.  However, some of the rules are up for interpretation.  Sometimes, the underwriter might not understand parts of the loan and will request more documentation before approving the loan. 

  Outcomes from the underwriter:

  There are 2 outcomes the loan will have when the review is complete:

• Approved with Conditions: This means that the loan has been approved and there was enough information for the underwriter to make an approval decision.  They have reviewed the loan and it fits within the rules of the government agencies.  The underwriter will also add any conditions (if any)  before the loan documents can be signed.
• Suspended: A suspended status from the underwriter means that the underwriter did not have enough information to know if the loan fits within the agency guidelines.   The underwriter will request more documentation from the borrower in order to give a decision on the loan.  The underwriter will also put in the suspended conditions what is required for an approval status.

• Once the files comes out of underwriting we will be contacting you right away with the next step in the buying process.  

  Possible Delays:

• Delay in Underwriting
  • Occasionally, underwriting will get super busy and sometimes backed up with loan files to approve.  We will ensure that your loan will not spend more than 3 days in underwriting prior to your loan being reviewed.  Purchases come first before refinances.  Anytime your loan is in underwriting for longer than 3 days, would be considered a delay.

Step 5 - Appraisal has Been Received

What to expect:

The appraiser will give two valuations of the home.  Comparison Approach and Cost Approach.  These will be different valuations and can sometimes be thousands of dollars different from each other.  Here are the different valuation approaches and what it means to you:

Comparison Approach:

• The comparison approach is the value that the lender will use for the purchase or refinance of your home.  The value is given based on other sales within a certain radius of the home.  The appraisers job is to find the most similar property in age, square footage, lot size exc. that is closest to the property and that has sold most recently.  The appraiser will find 3 - 4 homes that match the subject property and will compare them.  You can review each comparable on page 2 of the report.  Additional comps will be on page 7 of the report.

Cost Approach:

• The cost approach is the valuation the appraiser will use based on the cost to rebuild the home plus the cost of the land.  This valuation is not used from the lender.  This is only for the lender to understand the valuation of the land compared to the Comparison Value.  Normally the land value can not be valued more than 30% of the overall comparison value of the property.  
• The cost approach is also used by your Insurance Agent to determine how much to insure your property.  They will want to know how much is possibly needed to rebuild the home.

Things to look for on the appraisal:

• Repairs required:  Sometimes the appraiser will notice items that need to be repaired or items that are health and safety hazards.   The appraiser will note these items on page 2 of the report at the bottom of the page.  These are items that need to be fixed or repaired prior to closing the loan.  We will also note these items and send a separate email with the items that are required.
• Comparison Value vs Purchase Price: If the value of the home comes in less than the purchase price of the home we will need to contact the seller and renegotiate the purchase price of the home.  If the seller does not reduce the purchase price of the home the buyer will have the option to back out of the agreement and get their earnest money deposit back.

Possible Delays:

• Repairs
  • Depending on the repairs this could cause a delay in closing.  Sometimes the seller will not want to do the repairs until the buyer has full underwriting approval.
• Value Disagreement
  • Sometimes, the underwriter disagrees with the appraisers value.  The underwriter has a few different options when they disagree:
    1. Request that we have the investor approve the appraisal and the loan prior to Loan Simple funding the loan.  This causes a delay because we are subject to the investors waiting periods.
    2. Request an Appraisal Review by another appraiser.  The underwriter will want to hear another appraisers opinion of value based on the current appraisal.
• Additional Comments from Appraiser
  • Sometimes, we are subject to the appraiser getting back to us on requested information.  If the appraiser is out of town or is not able to get to our request in a timely manner this can cause a delay in your closing.

Step 6 - Out of Underwriting

What to Expect:

Once the loan comes out of underwriting we will be contacting you with any questions the underwriter might have and give you the outcome of the loan.  It's important to get any conditions the underwriter  requests to us right away. Then we can submit them back to underwriting for final loan approval.

Next Step: Sending back the Conditions to Underwriter

After receiving the fulfilled conditions from the borrower, we will submit to the underwriter for final loan approval.  This process can be 1 - 3 days, sometimes sooner, depending on when the underwriter receives it and how long it takes for him or her to review the fulfilled conditions.  

Closing date is Approaching:

Your close date is approaching fast.  It's important to NOT schedule moving trucks or other items regarding moving until we know exactly when we can get to step number #10.  Once we have the clear to close from the underwriter, we can then send loan documents to the title company for final loan closing.

During step #8 we also work on step #9.  Step #9 takes a few days and is done 3 days prior to your closing date.

Possible Delays:

• Additional Documentation
  • If the underwriter requests more documentation from the borrower this could cause a delay if the borrower does not get us the documentation right away.

Step 7 - Sending Figures to Title

What to expect:

We send figures to the title company so that they can prepare a final Closing Disclosure.  The final CD has all the final figures for your loan including: 

• Cash to close
• Credits from the seller
• Final loan amount
• Etc. 

This process is normally 1 - 3 days.  Sometimes, there are corrections with credits and accuracy of the way the costs are allocated between the buyer and seller.  Please be patient while we work with the title company to complete your final HUD.   

Borrower receives closing disclosure prior to signing:

As soon as we get the final CD approved, and is accurate, we will send you a copy for review prior to signing your loan documents.  This is an important process because we want to make sure the figures are accurate according all parties involved.

We do not want you feeling that the numbers are not accurate at the signing.  After reviewing the HUD please let us know if you have any questions or if any corrections need to be added. 

After Closing disclosure is completed:

Once the HUD is completed, Loan Simple will also perform an audit to ensure the final HUD fits within the agency and investor requirements.  This audit is required prior to the borrower signing their final loan documents.  The audit takes 3-4 hours to complete and sometimes sooner if needed.

Next Step:

Sending your Closing Disclosure for review and signature.

Possible Delays:

• Title Company
  • Sometimes the title company can get behind and might take longer to get the final HUD back from the title officer.  If it takes longer than 24 hours for Loan Simple to receive the HUD after sending the figures, this would cause a delay in your loan.
• Loan Changes
  • At this stage in the process if there are any changes to the loan this may cause a delay in the loan closing.  Sometimes, changes are needed when the file comes out of underwriting.  For example, the underwriter requests that we send the loan to a different investor.  This can sometimes cause a 24-48 hour delay in closing.

Step 8 - Closing disclosure sent

What to expect:

After completing step number 7 we are ready to send you the Closing Disclosure.  This disclosure is required to be sent at least 3 days before we send the loan documents to the title company.  This is a time sensitive document that will need to be signed either:

• Electronically - We will send you an email with a link to review and e-sign the disclosure
• In person - Please let us know if you need to sign in person.  This will help avoid any delays in the process.

Possible delays:

Every day that you are not able to sign your CD (Closing Disclosure) is another day that we will need to extend your closing.  Signing this document right away is very important to being able to close your loan on the scheduled time.

next STep:

Step Number 9.  After signing your closing disclosure you will be able to move to the last step in the process :).  This is when you go to the title company and sign your loan documents

Step 9 - Loan Docs

What to expect:

The title company will give you a call to schedule your loan signing.  This signing is the final step before  you get your keys to your new home.  There are a few things to keep in mind during this step:

• How long is the signing process?
  • The signing can take up to an hour depending on how many questions you might have during the process. 
• When do I take possession?
  • After your loan signing the title company will then be waiting on the funds to close from both the lender (Loan Simple) and the borrower (if applicable).  Typically, the title company can record your new deed 24 - 48 hours after funds have been received.
• How much money do I give to the title company?
  • You would have received the final dollar amount needed (If applicable) in step number 9.  Also, the title officer when scheduling the appointment, will give the exact amount needed from the borrower.  
• Do I wire my money or get a cashiers check?
  • Typically, it is better to wire the funds from your bank account instead of getting a cashiers check.  If you get a cashiers check the title company is required to hold the check overnight.  This can cause a delay in the recording of your deed.

Next Step:

After signing your final loan documents you will have to patiently wait to get your keys from your realtor.  Thank you so much for giving Loan Simple the opportunity to fund your loan and help you fulfill your dreams of home ownership.  

Possible Delays:

• Title Officer Schedule
  • Sometimes, the title officers schedule is booked for a day or two.  This can normally happen at the end of the month.  The title officer is a notary that helps sign the loan documents.