An Overview of the Loan Process
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While the home
buying process can differ from state to state, the
following are the basic steps you can expect to
follow in the mortgage loan process. |
Organize your
documents
If you are buying or refinancing a home
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1. If you are salaried: provide two years W-2 and one month of paystubs OR if
you are self-employed: provide two years tax returns and a YTD profit and loss
statement. |
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2. If you own rental property, please provide rental agreements and two years
tax returns. |
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3. If you wish to speed up the approval process, please also provide three
months bank statements for each bank, stock and mutual fund account. |
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4. Provide recent copies of any stock brokerage or IRA/401K accounts that you
may have. |
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5. Provide a copy of divorce decree if applicable. |
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6. If you are NOT a US citizen, provide us with a copy of your green card (front
& back), or if you are NOT a permanent resident provide us with your H-1 or L-1
visa. |
If you are applying for a home equity loan
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1. If you are salaried: provide two years W-2 and one month of paystubs OR if
you are self-employed: provide two years tax returns and a YTD profit and loss
statement. |
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2. If you own rental property, please provide rental agreements and two years
tax returns. |
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3. Please provide a copy of the note on your first mortgage. This will normally
be found in your closing loan documents. |
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4. Please provide a signed letter explaining what you plan to do with the
proceeds. |
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5. Provide a copy of divorce decree if applicable. |
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6. If you are NOT a US citizen, provide us with a copy of your green card (front
& back), or if you are NOT a permanent resident provide us with your H-1 or L-1
visa. |
Get
Qualified
Getting qualified before you apply for a loan can help you understand how
much you can borrow. When buying a house, you may get pre-qualified or
pre-approved. You do not need to have a particular property in mind to
obtain a pre-qualification. You can typically get pre-qualified over the phone or on the
Internet in a few minutes. A pre-qualification is not as beneficial as a
pre-approval where you have to go through a more rigorous process which
includes verification of your credit, income, assets and liabilities. It is
highly recommended that you get pre-approved before you start looking for a
house. A pre-approval is an application for credit and a lender's
written commitment (subject to verification) of how much they will let you
borrow and requires more information than a pre-qualification application, such
as the property purchase price and down payment amount.
This will help you:
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1. Find out the maximum house you can buy, so you don't waste time looking
for properties you can not afford. |
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2. Puts you in a stronger position when you are negotiating with the seller,
because the seller knows that your loan is already approved. |
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3. Helps you close quickly, since your loan is already approved. |
Shop
loan programs and rates
To shop for a loan you will
need to:
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1. Think about how long you plan to keep the loan. If you plan to sell the
house in a few years you may want to consider an adjustable or balloon loan. On the other hand, if you plan to keep the house for a longer time, you may
want to look at fixed loans. |
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2. Understand the relationship between rates and points. Points are
considered to be prepaid interest and are tax deductible. Each point is
equal to one percent of the loan. So for example, 1 point on a $150,000 loan
is $1,500. The more points you pay, the lower the rate you will get. |
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3. Compare different programs. Shopping for a loan can be difficult. With so
many programs to choose from, each of which has different rates, points and
fees, it's hard to figure out which program is best for you. |
Apply
for your loan
This step is where an experienced loan officer can help you
make a decision that's best for you. The wrong mortgage product can
cost you thousands of dollars. This makes it worth your time to let
Hometown America help you understand the different mortgages that are available
so that you can make an informed decision. Tailoring your needs with the
applicable
mortgage program will insure that your best interests are considered as you move toward
purchasing your property.
Obtain
Loan Approval
Once your loan application has been received, Hometown
America will
start the loan approval process immediately.
This involves verifying your:
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1. Credit history |
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2. Employment history |
| 3. Assets including your bank accounts, stocks, mutual fund and retirement
accounts |
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4. Property value based on your specific situation; additional documents or
verifications may be required. |
To improve your chances of getting a loan
approval:
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1. Fill out the loan application completely. |
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2. Respond promptly to any requests for additional documents.
This is especially critical if your rate is locked or if you plan to close
by a certain date. |
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3. Do not make any major purchases. Do not buy a car, furniture or another
house till your loan is closed. Anything that causes your debts to increase
might have an adverse affect on your current application. |
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4. Do not move money into your bank accounts unless it can be traced. If you
are receiving money from friends, family or other relatives, please contact
us. |
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5. Do not go out of town around the closing date. If you do plan to be out
of town when your loan is expected to close, you may sign a power of
attorney to authorize another individual to sign on your behalf. |
Close
the Loan
After your loan is approved, you will be required to sign
the final loan documents. This will normally take place in front of a notary
public.
Be prepared to:
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1. Bring a cashiers check for your down payment and closing costs, if
required. Personal checks are normally not accepted. |
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2. Review the final loan documents. 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. |
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3. Sign the loan documents.
Your loan will normally close shortly after you have signed the loan
documents. On refinance and home equity loan transactions federal law
requires that you have 3 days to review the documents before your loan
transaction can close. |
