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APPROVAL PROCESS
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GLOSSARY

The Approval Process


There are two processes currently being used by mortgage lenders today.

The first is the Manual or Traditional Method of processing a loan. During this approval method after you apply for your loan a Loan Analyst collects the documentation necessary to verify the information on your mortgage application and then submits the loan to an Underwriter who would then review the loan package and make a decision on the loan.

The second type is the Automated Method, this approach uses technology to provide you with a loan approval at the time you apply for a loan. With this method your Loan Officer will input your application into a computer and then go on line and connect to a Automated Underwriting system. The Automated Underwriting System will then review the application and provides you with a Loan Commitment instantly.

The following Processes combine to make up the Mortgage Process:

THE VERIFICATION PROCESS

The Bank or Mortgage Company will verify the financial and personal information that you provided.

Depending on which approval method your Bank or Mortgage company is using this process can occur before or after your loan has been approved. Discrepancies or variations between your application and your documentation may result in the request for additional documentation or clarification from you.

The Manual Approval Process

Once you have met with a Loan Officer and applied for a mortgage loan, the Bank or Mortgage Company will immediately begin to process your loan request. This is an outline of the general processing steps:

  • Your loan file will be assigned to a Loan Analyst or Loan Processor.
  • Your Loan Analyst will begin by mailing all necessary verifications, ordering a property appraisal, ordering a credit report, and instructing an attorney/title company to begin the preliminary legal work.
  • Your Loan Analyst will follow with a letter of welcome to you detailing any additional information they need to complete your loan file.
  • Once the application is complete, your loan file will be underwritten, this is normally completed within two (2) days of its submission to the Underwriter.
  • If your loan request is approved, you should be notified verbally by either your Loan Analyst or your Loan Officer. You will also be sent a written commitment letter that outlines the terms and underwriting conditions of your approval.
  • These conditions need to be discussed and cleared before you can schedule a definite closing date. There may also be closing conditions for your loan.

The Automated Approval Process

At your Application appointment your Loan Officer will enter your application information on a lap top computer.

  • The Loan Officer will connect his laptop to a phone line and dial into a Automated Underwriting system. The two most commonly used are the Fannie Mae System and the Freddie Mac Loan Prospector stem.
  • The Automated system will obtain a credit report instantly, review the details provided in your application and make a decision on your loan. The outcome can be one of two options. The first outcome is that your loan is approved. The second outcome is the loan is referred to a Loan Analyst. If this occurs it does not mean that the loan has been declined but that the system was not able approve the loan and refers it for the Manual Approval Method.
  • Once your loan has been approved you need to provide documentation to substantiate the information provided in your application.
  • Your loan file will be assigned to a Loan Analyst or Loan Processor.

  • Your Loan Analyst will begin by reviewing your financial information, ordering a property appraisal, and instructing an attorney/title company to begin the preliminary legal work.
  • You will be sent a written commitment letter that outlines the terms and underwriting conditions of your mortgage approval.
  • These conditions need to be discussed and cleared before you can schedule a definite closing date. There may also be closing conditions for your loan.

 

THE CLOSING PROCESS

  • The closing process begins after you have satisfied the underwriting conditions on your commitment letter. At this point, you may arrange an exact time and date for the loan closing.
  • The closing should be arranged with the assigned attorney/title company shown on your letter of commitment.
  • You will need to bring a certified or bank check to the closing for the closing costs and any additional down payment funds that are still outstanding.

 

The Appraisal Process

  • The Bank or Mortgage Company will select an appraiser to provide an estimate of market value for the property you have chosen. While some companies are starting to use Computer valuations instead of the tradition appraisal it is highly recommended that you stick with the tradition appraisal as it is a more accurate reflection of the value and is from an unbiased source..

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