Understanding the Home Loan Process

In order to finance or refinance a loan the lender requires documentation to verify and substantiate your employment, credit and financial situation to assure its investors that you have the ability to repay the money. This documentation may consist of tax returns, recent pay stubs, bank statements, verifications of employment, deposit and rent or mortgage, appraisal, purchase agreement, divorce decrees, bankruptcy papers and any other information the lender deems necessary.

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You will have to provide a completed loan application and the requested documentation to your loan agent, in turn, the loan agent will be the go-between you, the borrower, and the underwriter. The underwriter is the person who goes through the documentation and information you have provided with a magnifying glass to make sure everything fits the program requirements. Be sure to have everything in order because you will not be able to speak with underwriter - it is the loan agent's job to communicate information to and from the borrower.

It could take anywhere from several days to a couple of weeks to get the initial response from the underwriter depending upon their workload. The underwriter will either approve the loan as it is or, more likely, provide a list of items that need clarification or additional documentation.

You should expect to be asked to provide additional items. Once you give these to your agent, it will be a few more days before you hear back again. The underwriter may come back to the agent several times with certain "conditions."  This is not a reason to be concerned. The underwriter is simply doing an underwriter's job. At this point, what you have is conditional approval - meaning, your loan is approved pending removal of these conditions.

The entire loan process usually takes between two and four weeks, but could possibly take longer, depending on the particular circumstances of the loan. Loans for self-employed people, people with poor credit, or people with unusual circumstances often take longer because of the additional documentation required.

Once the loan is approved, the loan papers will be sent to the escrow/title company or your attorney. The escrow officer or attorney will add other documents to the file created from information received from the lender. Once these documents are prepared, the escrow officer or attorney will contact you to set up an appointment for you to come in and sign your papers.  Get ready to wade through and sign a mountain of papers. The escrow officer or attorney should provide you with a copy of everything you sign.

From the date you sign your papers, it will be another two or three days until the loan is funded, which is when the money is transferred.  The loan will close, or record (with the county), one or two days after the loan has been funded. Once the loan is recorded, the transaction is complete.

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