Mortgage Process

Before you shop for a home, you should secure a pre-approval letter. This document shows the amount of the mortgage the lender believes you are qualified to borrow and any terms associated with the loan. The loan officer will do a cursory review of your credit report and income to determine your creditworthiness.The letter shows the builder that you have the ability to purchase the home you’ve contracted to build.

Your home loan application begins after you’ve selected a home and have a signed purchase and sale agreement. You’ve already submitted the basic information to secure your pre-approval. Now, the lender has the information on the home you are going to purchase and will require information and documents for the underwriter to review. The lender will review your credit report to review your score as well as your history of borrowing and repaying debts, and your amount of outstanding debt. You’ll be asked for a copy of your past two income tax returns and bank statements. If you’re currently employed, you’ll be asked to submit the last two paycheck stubs or other proof of income.

The lender will prepare a package of disclosures that require your signature before underwriting can proceed. Often, this can be done via email with the e-sign feature.

Although you have been pre-approved, your loan qualifications will now be reviewed more carefully by an underwriter. You might need more documents to justify any potential obstacles; often a letter of explanation (LOE) will suffice. Once the underwriter has reviewed your entire file, the decision will be made as to whether or not the loan is approved or denied.

This document will be provided to you before the closing, and it outlines the fees associated with the funds being transacted at the closing, so you’ll know which payments will be required to complete the closing.