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The Loan Process |
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CONTACT
Dennis Owens
c/o
Sigma Mortgage
9220 Teddy Lane, Ste 1000
Lone Tree, CO 80124
Fax
Sat/Sun call:
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E-mail
IMPORTANT! Please be sure to read and agree to the Legal Disclaimers pages before you email or call me for any financial advice or services.
Thanks!
DCO
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Although I try to make it simple and easy for you, obtaining a mortgage loan is not always a trivial process.
Here I will explain the ins and outs, the paths and pitfalls of the process. You may see very little of these goings-on but understanding them can't hurt.
The Traditional Loan Process
To be complete, and to take the mystery out of mortgages, I have described the traditional path here. Most of these things will be going on behind the scenes while you relax and think about your savings realized from your new loan or perhaps what you will be doing with the cash from your refinance.
Analysis
Your loan application is submitted through me as your loan officer, where I become your professional representative in the loan process. It is to my advantage to get you your loan, since the my compensation is based upon loans that are successfully completed. I assemble the documents in your file, and review your file with two things in mind: Do you indeed qualify for the type of loan you want, and will it pass smoothly through the underwriting process. Essentially, as the loan officer I must "pre-underwrite" the loan myself and determine if it will most likely pass the particular loan's requirements. I sometimes encounter unexpected surprises such as an unknown title glitch, lien etc. There are many items to get processed and approved throughout the loan process. And avoiding delays and complications is always the goal.
Packaging
As your loan officer I put all the collected documentation in order, try to anticipate any unusual circumstances that may affect your loan approval, and write a cover letter to the lender that emphasizes your strong points and "sell" you as a borrower.
Once your loan package is put together with all appropriate notes, it goes to a loan processor, who will order any additional information the lender may need. This may include, for instance, verification of your bank balances, employment, and mortgage or rental payment history. However, there are also special types of loans loans that do not require such things employment, income verification etc., often called LOW DOC, NO DOC, STATED INCOME etc., I use these types of specialized loans to serve my clients who have special circumstances.
Anyway, typically these loan package items often take about a week to gather, after which your loan is ready to submit to a lender. As your loan officer I will then reconfirm your original intentions about your loan program. If you and I have not already locked in your loan, I will review the direction of interest rates with you, and, if rates are rising, I may suggest you lock in your loan now.
Submission and Underwriting
Now, your loan is submitted to a lender. The lender sends it to the underwriting department, which reviews the file for compliance with the guidelines specific to the program you have selected, and assesses whether or not you are a good credit risk. The underwriter is the first, but most important, gate through which you must pass to loan approval.
One of four things can happen here:
- If you are not qualified for the program, you are declined. This is a rare occurrence, but it happens sometimes even when the loan package we supplied seems to be in perfect order.
- Your loan is put in "suspension." It is not approvable in its current form because there are some important questions about the interpretation of your loan package. However, we are given a chance to address those questions, and the implication is that the loan will be approved if the questions are addressed in a satisfactory manner.
- You are approved and ready to go, with no further conditions or questions. This is rare, too, as each underwriter focuses on different areas, and though they want to make as many good loans as possible, it is their job to question your file.
- By far the most common outcome is that you are conditionally approved subject to meeting certain well-described conditions.
- In some cases, the loan cannot be approved at the targeted rate we initially applied for. And in some of these situations we are then given the option from the said lender to accept a higher interest rate. The other option is for me to notify you of the complications and resubmit your loan to a different lender for the same or a different loan and or rate. In such situations, you and I would discuss and decide our next move depending upon the type of complications we encountered and our updated feelings as to the strength of your loan application package.
Response and Action
If your loan has been declined, I as your loan officer will review the package to determine if it can be modified - repackaged - to get an approval somewhere else.
If your loan is suspended, I as your loan officer along with my processor will help you gather the documentation or information needed, and submit that to the lender to get approval.
If your loan is approved without conditions, it's time to lock your loan, send documents to the title company, and go sign papers!
If your loan is approved with conditions, I as your loan officer along with the loan processor will work with you to gather those items needed to satisfy the conditions sited. For example, if you need to provide additional information we will assist you, while the processor will gather any such items needed having to do with title conditions or in which you do not need to get involved.
Responses to conditions are submitted back to the lender. The underwriter reviews each response to see if it satisfies the condition, and "signs off" on the conditions one by one. When all the conditions are satisfied, your loan is fully approved and the lender is committed.
Sign-Off
At approval, a title company company becomes heavily involved. The title company is a neutral third party that, for a fee, holds all the documents and funds in escrow, and ensures that all parties get what they say they want, or points out where differences lie so the parties can resolve them.
I as the loan officer check with you to find out when you would like to sign the loan papers. Documents are then ordered from the lender to be submitted to the title company, giving the title company at least 24 hours to review the documents, comply with the lender's instructions, and draw up the papers for your signature. Please exercise your wrists and forearms during this period; you will need strength for signing.
Funding
Once you have signed the papers, the title company sends the completed papers back to the lender for funding approval. In this process, the lender confirms that all its instructions to the title company were followed, and approves disbursement of the funds.
If this is a purchase transaction, funds are wired to the title company.
If this is a refinance transaction, you have a three-day right of recission. Yes, that's right, you have three working days (Saturdays included) to say "Oops, I didn't want that!" Once that period is up, you are assumed to want the loan, and the lender sends the funds to the title company.
Recording and Close of Escrow
The title company, once funds are received, reviews the file one last time to verify that all instructions are clear and consistent, and that all parties are in agreement.
The title company then disburses funds strictly per written instructions. The next day, they record all the legal documents that have been executed, and record a reconveyance on all old liens. Once the new loans (and the grant deed in the case of a purchase) have been recorded, the loan and the escrow are considered closed.
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