The Loan Process
If you're like most people, you will probably need to secure a mortgage loan for your new house. Application for a home loan can take as little as one week and up to a month, depending on the type of mortgage. Your lender or mortgage broker will be able to give you a better idea of the actual time it will take from application to approval. However, in general, conventional loans are processed more quickly than FHA or VA loans.
The following is a step-by-step outline of what to expect during the loan application process:
1. ApplicationBring all required documents. (See the checklist below.) You’ll be seeing the Good Faith Estimate of Closing Costs and the Truth in Lending statement.
2. ProcessingYou will need verification of employment, verification of deposits and you’ll see your credit report.
3. UnderwritingYou will make sure that all the conditions of the purchase have been cleared.
4. Purchase Homeowner's InsuranceYou will purchase homeowners insurance to guarantee the loan will be repaid.
5. EscrowAt this point, you will find out:
- The funds needed for closing.
- The schedule for closing.
- When the deed will be prepared and mortgage note.
- When closing and title transfer will occur.
6. Application ChecklistTo speed up the application process, bring the applicable following items to your loan application appointment.
- Signed copy of Purchase Agreement plus all Addendums.
- Tax and Legal description on subject property.
- Residence addresses for the past two (2) years.
- Past two years' W-2 statements or 1099’s.
- Computer generated paycheck stubs for last 30 days.
- Names, addresses and phone numbers of Employers for past two (2) years.
- Past two (2) month’s statements for all Checking, Savings, IRAs, 401Ks, Money Markets, Profit Sharing and evidence of Stocks and Bonds. Document all recent large deposits.
- Income received for commissions, bonuses, partnership(s), corporation(s), or if self-employed, requires two (2) year’s Personal Federal Tax Returns with all Schedules along with a current P&L Statement and Business Balance Sheets and past two (2) years’ Partnership and/or Corporate Returns, if applicable.
- Cancelled checks from rent or mortgage for the last 12 months, and name and address of any landlord(s) within the last 12 months.
- Names, addresses, account numbers, monthly payments and balances on all open loans and revolving credit accounts.
- Copy of Bankruptcy Petition listing all creditors and copy of Bankruptcy Discharge Papers (if applicable). Please provide letter of explanation as to why the Bankruptcy occurred.
- Copy of Driver’s License and Social Security Card (VA Loans Only).
- Certificate of Eligibility and DD214 Discharge Paper (VA Loans Only).
- Application fee (check or money order).
- Copy of divorce decree and/or separation agreement.
- A "Friend of the Court" letter stating the amount of any alimony/child support payments and notification that the account is current.
- 1040 tax forms (if you’re self-employed) for the past two years, 1120 Corporate Tax Returns (or Form 1065 for Partnerships) for the previous two years, year-to-date profit-and-loss statement and balance sheet signed by your accountant.
- 1040 tax forms for the past two years (including schedules) if you own income properties or if your income is based on commission or bonuses.
Fortunately, as you work one-on-one with your home mortgage consultant, he or she should be able to offer valuable lending expertise and advice and answer all your questions while ensuring that your loan application process progresses as smoothly and quickly as possible.