If you’re on the brink of buying your very first home, most any homeowner today will tell you it’s the fastest 30 days you’ve ever experienced. Why? one of the main reasons is there are a lot of “firsts” going on and third parties you’ve never heard of all working on your loan file. But knowing in advance what you can expect will help you navigate the process. In fact, that’s what a loan approval really is…a process. Things don’t happen all at once but at a measured, methodical pace.
When you first submit your loan application for a preapproval, your lender will review the information on your application and ask for supporting documentation. If you haven’t received your preapproval or haven’t thought about getting one, this is the first thing you should do. Your lender will ask for copies of your paycheck stubs covering a 30 day period along with your two year’s most recent W2 forms. Lenders ask for at least a two-year employment history and your W2 forms help fill that requirement. You’ll also be asked to provide copies of your most recent bank statements from the accounts you’ll be using for a down payment and closing costs.
Your loan officer will also pull a credit report and credit scores. Most loan programs today ask for a minimum credit score of at least 620. If you haven’t checked your credit report on your own, it’s suggested you do so at least once per year. You can get a free credit report at a verity of places online for free. If there are any mistakes, document the errors and have your loan officer help you with the needed corrections.
Once you receive your preapproval letter, it’s time to do some serious shopping. Your loan officer has given you a qualifying loan amount so you know the price range you’re looking for and what your estimated monthly payments will be based upon current market interest rates.
When you make an offer on a home, the sellers will ask if you’ve spoken with a lender. At this point, you will provide a copy of your preapproval letter. This is critically important in today’s marketplace. When sellers receive more than one offer, the one accompanied by a preapproval letter will get the nod. This letter not only shows the sellers you’re interested but all you need to complete the approval is a property.
At this stage, most of your work has been completed. After you provide your lender with a copy of your sales contract signed by both parties, the lender will then order supporting documentation needed to finalize your loan approval. Your lender will order an appraisal, title and contact the settlement agent handling the closing. For the next few days, it might seem as if there’s not much going on with your loan application but nothing could be further from the truth. Your lender is busy ordering, receiving and placing supporting documentation in your loan file to be submitted to the underwriter. The underwriter is the individual who determines whether or not your loan file meets the selected loan program guidelines.
Once this milestone has been reached, your loan papers are prepared and electronically delivered to your settlement agent. You schedule an appointment and prepare to have the necessary funds to close wired to the closing or bring a cashier’s check. Once this has been completed, the signed paperwork is returned to your lender who then authorizes the release of funds. Your loan has now officially closed.
First time buyers that have questions starting the process can contact us 7 days a week at ph: 904-810-2293