Overview of Mortgage Process in 10 Steps

Step 1: First Contact

Step 2: Loan Shopping

Step 3: Loan Application and Disclosures

Step 4: Documentation

Step 5: Submission

Step 6: Underwriting

Step 7: Conditional Approval

Step 8: Underwriter’s Review

Step 9: Closing

Step 10: Funding and Disbursement

Step 1: First Contact
Your first contact with your loan officer will probably be a brief exchange of information – he or she will want to find out what you’re looking for in a mortgage and get some information from you like your full name, date of birth, present address and social security number. He will need that information to pull your credit, which will be analyzed along with your income to see what you qualify for.

Step 2: Loan Shopping
Next, your loan officer will “shop” your loan, which means he will take your information to the best lenders to see what they can offer you. When he feels like he’s found what you’re looking for, he’ll call you back so you can make a decision together on your rate and loan program.

Step 3: Loan Application and Disclosures
Your loan officer will prepare a loan application and disclosures for your signature.
The loan application outlines the specifics on the loan including loan type, rate, property type, income and asset information etc.
Disclosures are documents required by federal and state governments to protect you – they’ll make you aware of some of your rights as a borrower.

Step 4: Documentation
Your loan officer will probably ask you to provide a few items in addition to your signatures on the loan application and disclosures. The items he’ll need from you include (among other things): 2 most recent pay stubs, W2s, bank statements, tax returns, etc. Your loan officer may call you at any time during the loan process for additional documentation. The faster you provide the documentation, the faster your loan will get finished.

Step 5: Submission
Your loan officer will gather the loan application, disclosures and all the documentation you’ve provided and will send it, along with some items that he’s ordered (like the appraisal and title report) to the lender that you decided on in Step 2.

Step 6: Underwriting
Once your file gets to the lender, an underwriter will take over. The underwriter’s job is to scrutinize the file to make sure it fits guidelines for the lender. Some things the underwriter will look at the closest are your appraisal, title report, income documentation and credit report.

*Please note: A lender who’s willing to finance someone else’s home takes a big risk, which is why underwriters are trained to be so thorough. The lender has to protect himself and his company against fraud and unqualified borrowers. He also wants to make sure he’s putting money into a property that will hold its value. He’s also protecting you, by making sure you’ll be able to make your mortgage payments. Please be patient while your file is in underwriting, and understand that the lender wants to protect his assets, just like you want to protect yours.

Step 7: Conditional Approval
When your file is finished in underwriting, an approval will be issued, based on what was found in the file. The approval is based on the underwriter’s recommendation, and basically says “we will approve this loan and finance this property if you can show us documentation to support this, this and this.” At this point, your loan officer may come to you, asking for additional documentation, (letters of explanation), etc. Or he may be able to take care of it on his own. Items required in order for the loan to be approved are called “conditions”.

Step 8: Underwriter’s Review
Once all the supporting documentation has been sent, the underwriter will review what the loan officer sent in and give you one of two answers:
a) Your file has been approved and is ready to close
b) More documentation is required (In this case, your file will repeat steps 7 and 8 until you reach approved status)

Step 9: Closing
Your loan officer will order closing documents (often called “docs”), which will be emailed to the title company, where you will go to sign the documents. Once he finds out what works best for you, your loan officer will set the appointment for your closing at the title company.

Step 10: Funding and Disbursement
If you’re purchasing, your funding will generally occur the day of or the day after you close. If you’re refinancing, your finding will occur after your 3 days right of rescission has passed, which means if you closed on a Monday, your loan will fund on the Friday of the same week. Monies from the funding will be wired to the title company, who will work out disbursement.

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