Navigating the mortgage process can be daunting and overwhelming at times. It can seem like everything is happening at once! With appraisals, title work, verifications and tax returns, then your lender can ask you questions about things that sound like alphabet soup - DTI, LTV, and PMI, and you finish your discussion trying to understand different aspects of your credit history. Hopefully the following information and mortgage road map can help you understand a little more about the process. However, you do not have to become an expert; that’s why our mortgage loan officers and their team are on standby to help guide you through your mortgage journey.
Your Mortgage Road Map
There are different directions a mortgage can go; however, the steps below help describe what the journey can be like and the primary direction they follow.
Application and Prequalification
- Provide application information to your lender – this information can include your employment history, current income, down payment information, etc. Most of the time the lender will ask you to fill out an application as part of the process.
- Consultation with your lender – Your lender and you will talk through your different options for loan products and talk through the loan process in general. This is essential to establishing the right product for your mortgage path, whether it is purchasing your first home to refinancing for home improvements.
- Prequalification (for purchases) – Once you and your lender have had a chance to discuss your mortgage endeavor, your lender will process your application and work to get you prequalified for a home purchase. You may receive a letter of prequalification to provide to a seller to show you have started the mortgage process with a lender. Many realtors like to see that buyers have this letter to look at properties and to submit an offer.
Property or Project Details
- Offer Accepted or Project Plans Finalized – Your offer has been accepted on the home or your project plans are finalized. Now it’s time to put the plan you and your lender initially discussed into action.
- Loan Estimate – Your lender will work with the rest of the mortgage team to put together a Loan Estimate (LE) for you. This document will highlight your loan details like loan amount, term, and estimated payment, and will also provide you an estimated amount for closing costs per the loan product for which you applied. You will also receive other disclosures detailing your other rights and resources available during the loan process.
- Intent to Proceed – After you have reviewed your LE and preliminary disclosures, we ask that you inform your lender if you intend to proceed with your loan via a signed Intent to Proceed document or other means of communication. Once you confirm your intent, the lender and mortgage team will get to work underwriting and processing your mortgage loan to move you closer to making your mortgage loan a reality!
Underwriting and Processing
- Verification of Application Information – Your lender and mortgage team will begin the verification process of the information provided via your application. This will include your employment status and history, income information, and credit history.
- Appraisal – A valuation to confirm the value of the property being mortgaged will be ordered. This is typically done by a state-licensed appraiser that goes to the home to do an on-site inspection and gives their opinion of the market value of the home based on sales comparisons.
- Title Work – A title commitment is ordered to make sure the title to the home can be conveyed to the new owner and/or a mortgage can be placed on the property by the lender. Sometimes it may involve further inquiries into past home transactions or a survey may need to be ordered.
- Closing Disclosure – Once all the information has been verified and the appraisal and title work come back sufficient, your lender will prepare a Closing Disclosure (CD) for your review. The CD will detail your final loan terms like loan amount, interest rate, and payment amount, and breakdown how much money you may need to bring to closing. It will also list all the closing costs that occurred during the process.
- Purchases – Closing day has finally arrived! Closings for purchases typically occur with a settlement agent at a title company. You will need to bring up to two forms of identification with you as well as the cash to close amount disclosed to you on your Closing Disclosure. These funds typically need to be in the form of a cashier’s check.
- Non-purchase loans – Loans not involving the transfer of a property can usually be closed in-house by your lender. You can set up a closing time with them and take care of signing documents right at the bank.
- Loan Servicing – Now that the loan has been signed and booked, it will come time for you to start making your payments. Some loan products have payments that can be made to Rivers Edge Bank while others may have a different mortgage servicer where payments should be submitted. Your lender should provide you with that information at closing so you are aware to where your payments should be sent.
- Escrow Accounts – As part of your loan process, you may establish an escrow account for your homeowner’s insurance, property taxes, flood insurance and/or private mortgage insurance. These escrow accounts collect part of your monthly payment so any of these items due from you can be made on your behalf. Each year your mortgage servicer will provide you an escrow analysis of all your ins and outs and what your projected escrow payments will be for the upcoming year.