The home mortgage process can often appear to be a daunting one, especially to first time home buyers. While there is nothing simple about getting a mortgage, it does not have to be difficult. It’s up to your mortgage provider to communicate clearly with you through the process.
The Mortgage process has five primary steps – 1) Pre-Qualification 2) Loan Application 3) Interest Rate Lock 4) Loan Approval Process 5) Closing
Any one of these processes can appear to be lengthy and confusing. Virtually all of the paperwork involved is required by state and federal law. Work with your mortgage provider to ensure you understand each step of the process.
Before a borrower begins their search for a new home, they should always be Pre-Approved. This process helps to determine what they can afford. You can submit your Pre-Qualification certificate with the purchase contract to the seller which enhances the offer and will make you more attractive to the seller. (Also read “Pre-Qualify Before You Buy.”)
2) Loan Application
Once all parties have agreed to the purchase price and terms have been signed, there is an executed contract, which becomes the foundation of the new mortgage. There are now 3 steps that need to be accomplished by the borrower in order to proceed with the loan. • Decide on a loan program. • Sign all necessary loan documents • Borrower must gather all their personal documentation to submit
3) Locking an Interest Rate
• The borrower may choose to lock their rate at the time of application or may choose to float their loan to be locked at a later time. • Generally speaking, the best pricing is available at 30 and 45 day locks. Knowing the closing date on the Purchase Contract helps us to determine the best time to lock the rate. • Rates fluctuate every day. It is always a good idea to secure your rate as soon as you can to avoid a surprise increase if the market rises.
4) The Approval Process
There are three major steps that are being accomplished between the client’s application signing and their closing with Wintrust Mortgage. • Appraisal – An appraisal is necessary to close your loan. Wintrust Mortgage will order an appraisal on the property to be sure that you are paying a fair market value for the home you are purchasing. • Title and escrow – The real estate attorneys will generally order these services and then forward the findings to Wintrust Mortgage so that we may include them in our final package. • Underwriting – Each loan will be sent to an approved underwriter who reviews the application, supporting documentation, financial information, sales contract, appraisal and title to be sure all necessary criteria and regulations are met. (Also read “The Loan Approval Process.”) (this should link to the page)
• The day before closing, the title company will generate a final statement of charges that incorporate the lender’s, attorney’s, realtor’s and title fees as well as taxes and insurance escrows. • On the closing day, you’ll sign all final closing documents at a title company. • Typically, your first mortgage payment will not start until the second 1st of the month after the closing date.