The Mortgage Loan Process
Congratulations! Having your offer accepted on a home is a huge milestone in your journey to homeownership. But what happens next? Now that your offer has been accepted, it’s important to focus on obtaining a mortgage and the final steps leading up to receiving the keys to your new home. Whether you’re eager to settle in or just curious about what comes next, this blog will prepare you as you approach closing day.
Commit to a lender
- Submit a full mortgage application and provide your lender with your intent to proceed with them. If this is a purchase transaction, you must provide a copy of the fully executed agreement of sale. If you were pre-approved, it makes this process faster and easier for you!
Choose a Mortgage Product
- Speak with an experienced loan originator to help you determine the best fit for you!
- Pennian Bank offers a variety of loan products and terms that fit your needs. Click here for additional details on Pennian Bank’s mortgage offerings.
Rate Lock
- Lock: This option allows you to lock your rate at the beginning of the process for a set amount of time (typically 45 – 60 days during the mortgage application process). This guarantees the rate discussed at the beginning of the application is the rate you get at closing!
- Float: You may choose to float your rate at your own evaluation of the market and at your own risk. Mortgage rates can adjust daily, even multiple times a day.
Disclosures
- Within three business days of application, your initial disclosures will be sent to you. These primarily consist of your full mortgage application to review and sign, allow the lender to proceed with your mortgage application, and provide you with the many required disclosures and documents.
Processing/Request for Documents
- Your loan processor will request a variety of documents to complete your mortgage application. These may include, but are not limited to: income documents (paystubs, W2s, tax returns), asset documents (bank statements and sourcing large deposits), identification documents (driver’s license), liability documents (tax and insurance information on real estate owned, statements on recently opened credit accounts, etc.)
Appraisal & Title Policy
- Your lender will order your title policy from your chosen title company and place the order for your appraisal. The title company will be responsible for the title search, real estate tax certifications, municipal lien, and sewage letters (as applicable), and other additional items as needed to confirm clear and marketable title and so that appropriate credits and prorations can be made to the sellers. The appraisal is an independent report of market value of your home for the purpose of the bank’s underwriting decision.
Underwriting
- Once all documents are received, your loan processor will send your loan to the Underwriting department to review for approval. Additional documents may be requested as part of the underwriting process.
Loan Approval
- Once your loan has been approved by underwriting, you will be notified of your approval and any conditions that need satisfied before we may close. If this is a purchase transaction, you will be provided with your loan commitment letter. It is common to still have outstanding title work and pending appraisal completion at this stage.
Homeowner’s Insurance
- After you have provided all the documents requested by the lender during the processing stage, you should start calling homeowner’s insurance agents for quotes. Once you have chosen your agent, have them contact your lender for the appropriate language required to be included in your policy. Your agent will need to send a declaration page summarizing the details of your policy to the lender and your title company to be paid as part of your closing costs.
Clear to Close & Scheduling your Loan Closing
- Once all underwriting conditions have been cleared, you will receive your “Clear to Close” status, and your loan will be sent to the closing department.
- You will work with your title company to coordinate your closing date, time, and location. If there are real estate agents involved, they typically help coordinate the details with all parties.
Final Closing Disclosure
- Prior to closing, the closing department will work with the title company to prepare your Closing Disclosure. All borrowers on the loan will receive a copy of the Closing Disclosure no less than 3 days prior to closing.
- This document includes a complete breakdown of all final numbers and your cash needed to close.
- There are cases where you may receive a revised Closing Disclosure including revised numbers such as real estate agent commissions or real estate taxes.
The Closing Process: Please bring the following:
- Cashier’s/Certified Check payable to your title company in the final amount needed for closing. If you prefer to wire your funds, or the title company requires a wire, your title company will need to provide you with the wire instructions. We always encourage the wire to be set up for the day before closing to ensure the transfer is successful in time.
- Personal check book. In the case where there was a revision to the Closing Disclosure, but you already had the cashier’s check made, a personal check can be accepted for small adjustments in cash to close.
- Proof of identification (i.e. driver’s license, state ID, or current valid passport).
It is our goal to help make the loan process as pain-free and smooth as possible. From pre-approval to closing, our loan officers are here to guide you through your home buying journey. Contact one of our mortgage lenders today to get started!
*Loans are subject to credit approval. Terms and conditions may apply. Speak to a Pennian Bank representative for details.
