As a first-time homebuyer, starting the process of obtaining a mortgage loan is…well, a first. This process can be confusing and intimidating if you don’t have help along the way. Our friends at Flat Branch Home Loans have offered to share their expertise in this quick guide so that you can feel confident and prepared as you make the exciting transition from renter to homeowner.
Your mortgage banker is there from the very beginning to help you. They’ll inform you on which loan programs would be the best fit for your goals and even help you complete your loan application. They will be there with you from start to finish to ensure that everything moves along according to plan and to act as a resource if you have any questions at all throughout the process.
What’s a processor?
Your processor gathers all the important aspects of your file, such as documents about your employment, income, monthly bills and the balance in your bank account. They also check and double check that all numbers are correctly calculated, so your underwriter has a comprehensive view of your financial narrative. They contact your insurance provider, order title work and coordinate the ordering of your home appraisal. Although they pass your file over to your underwriter, this won’t be the last you’ll see of them. They will be in contact with you throughout the whole experience. When they contact you, respond as quickly as you can. They’re your lifeline to make sure your file makes the closing deadline.
What’s an underwriter?
Your underwriter takes the information your processor has compiled to complete your loan application and looks it over to make sure everything is correct and conforms to your chosen loan program’s guidelines. They’ll also look at your appraisal once received and evaluate it based on those guidelines to make sure your home meets the requirements for your program.
Conditional approval: what it is and why it’s important
Once you hear the words “conditional approval”, know that you’ve made it through the main squeeze of your loan process. A conditional approval is where your underwriter has approved your file, but there are some conditions that need to be resolved, such as a question about a credit inquiry you had last month or a missing page from your bank statement. Your processor or mortgage banker will contact you with what your underwriter needs and what to do to resolve the conditions, so you don’t have to worry about figuring that out yourself.
An important note: We recommend trying to avoid making any big life changes, like getting a new job or making any big purchases, such as furniture for your new home, until after closing. This could affect your approval status big time.
What’s an initial closing disclosure?
During the loan process, you’ll most likely hear it referred to as an initial CD. The initial closing disclosure has all the important information about your loan’s terms and expenses. It’s required by law to send this out once your file has reached certain points, like conditional approval or receipt of homeowner’s insurance. You’ll need to acknowledge it so your mortgage banker knows you’ve seen it.
Clear-to-close: what it is and why it’s (very) important
This is where you can actually relax! The name is pretty self-explanatory but getting a clear-to-close on your loan means that your underwriter has given their stamp of approval on everything you’ve provided them, including the resolved conditions. You may also hear this referred to as a CTC. If funds are needed at closing, you can wire them directly to the title company or bring a cashier’s check depending on the amount.
Remember, no question is a stupid question. Your mortgage banker and processor are there to keep you as informed as they possibly can while your loan is being secured. Hopefully this quick guide has shed some light on the mortgage process from application to closing. If you’re ready to get the process started, contact us at SMH to speak to a New Home Specialist!