The Lending Process
Once you’ve found the home you want and negotiated a price that you and the seller agree on, it’s time to get your loan. When you submit a loan application, you can expect to complete lots of paperwork and provide information about your employment history, financial assets and liabilities, and credit. You may also be required to pay an application fee.
The next step is to lock-in the current interest rates and points for your loan of choice for anywhere from 30 days to six months. You may also elect to allow the interest rate to float, so that you can lock it in at a later time. If you decide to let the rate float you may end-up with a rate that is higher or lower than the rate on your date of application.
After you have reviewed disclosures and paid any required processing fees, your lender will order a property appraisal, to determine the fair market value of the home. You and/or your Realtor should be present for the appraisal inspection. You may be required to pay for the appraisal. When refinancing with certain loan programs, an appraisal may not be necessary.
You will then sign and return to the lender all required disclosures and any additional documentation needed to satisfy the conditions of the loan. When the lender receives the appraisal, a credit report, signed disclosures, and additional obligatory documentation, your loan officer will prepare and submit your loan for final approval.
A licensed title agent should then perform the settlement and escrow process. Your Loan Officer can help coordinate this. If purchasing a home, you will be required to bring a cashier’s check for the down payment and any other fees to the settlement. In a refinance, fees are typically covered by the loan proceeds. While at the settlement, you will read and sign numerous documents regarding your transaction.
As part of the settlement phase, your lender will wire the loan funds to an escrow account or send a cashier’s check to the closing agent, which may be a title company, an attorney, or an escrow agent, depending upon the state the transaction occurs in. The property’s owner or their lender is paid in full and all fees for all parties are paid. The property’s ownership will then transfer from the seller or the seller’s lender to your lender.