What Is The LOAN PROCESS
Here are your steps from start to finish
Are you considering purchasing a new home or refinancing your current property?
Understanding the mortgage loan process is essential in order to navigate through the complex world of real estate financing.
The mortgage loan process can seem overwhelming at first, but with the right knowledge and guidance, it can be a smooth and seamless experience. Here is a brief overview of the mortgage loan process to help you better understand what to expect:
1. Pre-Approval: The first step in the mortgage loan process is to get pre-approved for a loan. This involves submitting your financial information to a lender who will then determine how much you can borrow based on your income, credit score, and other financial factors. In the case of buying a home, you should determine how much home you can afford before you even begin looking. By answering a few simple questions, we will calculate your buying power, based on standard lender guidelines. Be sure to ask me how our Pre-Approval is better than others. Be in a better position when negotiating with the seller
Click here to get Pre-Approved.
2. House Hunting: Once you are pre-approved for a loan, you can start house hunting with confidence, knowing how much you can afford. It is important to work with a real estate agent who can help you find properties that fit your budget and preferences.
3. Loan Application: After you have found a property you want to purchase, you will need to submit a formal loan application to the lender. This will involve providing additional financial documentation, such as pay stubs, bank statements, and tax returns.
4. Loan Processing: Once your loan application is submitted, the lender will begin processing your loan. This involves verifying your financial information, ordering an appraisal of the property, and conducting a thorough review of your credit history.
5. Underwriting: The underwriting process involves a detailed review of your loan application to determine if you meet the lender's guidelines for approval. This may involve additional documentation or clarification of certain financial aspects.
6. Loan Approval: If your loan application is approved, you will receive a loan commitment letter outlining the terms and conditions of the loan. This is a crucial step in the mortgage loan process as it signifies that you are one step closer to closing on your new home.
7. Closing: The final step in the mortgage loan process is the closing, where you will sign all the necessary documents to complete the purchase of the property. This typically involves paying closing costs and any required down payment.
Understanding the mortgage loan process is key to a successful home purchase or refinance. By working with a knowledgeable lender and real estate agent, you can navigate through the process with confidence and peace of mind. If you have any questions or need assistance with the mortgage loan process, feel free to reach out to me. I am here to help you every step of the way.
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After your loan is approved, you are ready to sign the final loan documents. You must review the documents prior to signing and make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate. The signing normally takes place in front of a notary public.
There are also several fees associated with obtaining a mortgage and transferring property ownership which you will be expected to pay at closing. Bring a cashiers check for the down payment and closing costs if required. Personal checks are normally not accepted. You also will need to show your homeowner's insurance policy, and any other requirements such as flood insurance, plus proof of payment.
Your loan will normally close shortly after you have signed the loan documents. On owner occupied refinance loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can close.
Close Your Loan
Although lenders conform to standards set by government agencies, loan approval guidelines vary depending on the terms of each loan. In general, approval is based on two factors: your ability and willingness to repay the loan and the value of the property.
Once your loan application has been received we will start the loan approval process immediately. Your loan processor will verify all of the information you have given. If any discrepancies are found, either the processor or your loan officer will troubleshoot to straighten them out. This information includes:
Income/Employment Check
Is your income sufficient to cover monthly payments? Industry guidelines are used to evaluate your income and your debts.
Credit Check
What is your ability to repay debts when due? Your credit report is reviewed to determine the type and terms of previous loans. Any lapses or delays in payment are considered and must be explained.
Asset Evaluation
Do you have the funds necessary to make the down payment and pay closing costs?
Property Appraisal
Is there sufficient value in the property? The property is appraised to determine market value. Location and zoning play a part in the evaluation.
Other Documentation
In some cases, additional documentation might be required before making a final determination regarding your loan approval.
In order to improve your chances of getting a loan approval:
Fill out your loan application completely. You may use our online forms to expedite the process.
Respond promptly to any requests for additional documentation especially if your rate is locked or if your loan is to close by a certain date.
Do not move money into or from your bank accounts without a paper trail. If you are receiving money from friends, family or other relatives, please prepare a gift letter and contact us.
Do not make any major purchases until your loan is closed. Purchases cause your debts to increase and might have an adverse affect on your current application.
Do not go out of town around your loan's closing date. If you plan to be out of town, you may want to sign a Power of Attorney.
Select The Right Loan
Begin Loan Processing
Carefully weigh these factors and let our expert guidance light the way to the loan that seamlessly aligns with both your current reality and your long-term monetary aspirations.
Shape your financial future with the perfect home loan that fits like a glove. Every financial scenario is unique, and knowing which mortgage enhances your financial dreams is key to smart homeownership. Whether you’re stepping into a new home or refreshing your current mortgage, navigate the financial seas with two distinct types of home loans, each with its particular advantages.
Loan-To-Value & Debt-To-Income Ratios
LTV or Loan-To-Value ratio is the maximum amount of exposure that a lender is willing to accept in financing your purchase. Lenders are usually prepared to lend a higher percentage of the value, even up to 100%, to creditworthy borrowers. Another consideration in approving the maximum amount of loan for a particular borrower is the ratio of monthly debt payments (such as auto and personal loans) to income. Rule of thumb states that your monthly mortgage payments should not exceed 1/3 of your gross monthly income. Therefore, borrowers with high debt-to-income ratio need to pay a higher down payment in order to qualify for a lower LTV ratio.
FICO™ Credit Score
FICO™ Credit Scores are widely used by almost all types of lenders in their credit decision. It is a quantified measure of creditworthiness of an individual, which is derived from mathematical models developed by Fair Isaac and Company in San Rafael, California. FICO™ scores reflect credit risk of the individual in comparison with that of general population. It is based on a number of factors including past payment history, total amount of borrowing, length of credit history, search for new credit, and type of credit established. When you begin shopping around for a new credit card or a loan, every time a lender runs your credit report it adversely effects your credit score. It is, therefore, advisable that you authorize the lender/broker to run your credit report only after you have chosen to apply for a loan through them.
Self Employed Borrowers
Self employed individuals often find that there are greater hurdles to borrowing for them than an employed person. For many conventional lenders the problem with lending to the self employed person is documenting an applicant's income. Applicants with jobs can provide lenders with pay stubs, and lenders can verify the information through their employer. In the absence of such verifiable employment records, lenders rely on income tax returns, which they typically require for 2 years.
Source of Down Payment
Lenders expect borrowers to come up with sufficient cash for the down payment and other fees payable by the borrower at the time of funding the loan. Generally, down payment requirements are made with funds the borrowers have saved. If a borrower does not have the required down payment they may receive “gift funds” from an acceptable donor with a signed letter stating that the gifted funds do not have to be paid back.
Fixed Rate Mortgage
Embrace predictability with a Fixed Rate Mortgage, offering unchanging interest rates and monthly payments over 15 or 30 years. Ideal for you if you:
- Envision your life in the same home for the long haul.
- Seek the comfort of constant payment amounts.
- Prefer not to gamble on future housing costs.
- Anticipate a stable financial lifestyle.
Adjustable Rate Mortgage
Flex and flow with an Adjustable Rate Mortgage (ARM), mirroring the Fixed Rate Mortgage's lifespan but with a twist: interest rates and monthly payments that adjust over time. Opt for an ARM if you:
- Intend a shorter stay in your abode, up to 5 years max.
- Are at ease with financial flexibility in your monthly expenses.
- Are open to the potential of climbing payments.
- Believe your paycheck will rise over time
Get A Quick Quote
Begin Loan Processing
Close Your Loan
After your loan is approved, you are ready to sign the final loan documents. You must review the documents prior to signing and make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate. The signing normally takes place in front of a notary public.
There are also several fees associated with obtaining a mortgage and transferring property ownership which you will be expected to pay at closing. Bring a cashiers check for the down payment and closing costs if required. Personal checks are normally not accepted. You also will need to show your homeowner's insurance policy, and any other requirements such as flood insurance, plus proof of payment.
Your loan will normally close shortly after you have signed the loan documents. On owner occupied refinance loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can close.
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About Us
We've been helping customers afford the home of their dreams for many years and we love what we do.
Licensed in:
California NMLS# 02066654 | 60DBO-154093
Georgia & Texas NMLS#1767407
Florida NMLS#MBR5826
Contact Us
Main Office
3242 E. Coast Highway
Corona Del Mar, CA 92625
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Spot On Lending (“Inc.”), is an Equal Housing Opportunity Lender.
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