The Loan Process

Step 1. Organize Your Documents

A properly documented loan application makes your loan process go smoothly. This checklist will help you gather the necessary paperwork.

1. If you are salaried, please provide W-2's for the previous two years and one month of paystubs. If you are self-employed, provide tax returns for the previous two years, including all schedules, and a YTD profit and loss statement. (Note: provide copies of all requested documents. Do not provide original documents.)
2. If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules.
3. To speed up the approval process, provide bank statements for the most recent three months, and recent statements for stock, mutual funds and IRA/401K accounts.
4. If you are requesting a cash out refinance, provide a letter explaining how you will use the refinance proceeds.
5. If applicable, provide a copy of your divorce decree and settlement agreement.
6. If you are NOT a US citizen, provide a copy of your green card (front & back). If you are NOT a permanent resident provide a copy of your H-1 or L-1 visa.
7. If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors.
8. If you are applying for a home equity line of credit or loan (second loan), also include your first mortgage note. (This should be with your closing loan documents.)

9. We will provide you with the initial documents to sign, including a residential loan application, a credit authorization, and fair lending notice.
 

Step 2. Get Qualified

If you are buying a home, it is useful if you are either pre-qualified or pre-approved for a loan. We can often pre-qualify you over the phone in just a few minutes, giving you an indication of how much you will probably be approved for.

We highly recommend, however, that you be pre-approved before you start looking for a home. Pre-approval requires a more rigorous process, including verification of your credit, income, assets and liabilities.

Being pre-approved will:

1. Inform you of your maximum affordable home value, and save you from previewing properties outside your price range.
2. Put you in a stronger negotiating position with the seller, because the seller will know your loan is pre-approved.
3. Help you close quickly, since your loan is pre-approved.
 

Step 3. Shop Loan Programs and Rates

We have a full-time in-house research team whose job it is to "shop your loan". They scour the state and country for all the available mortgage programs that might meet your needs, and provide you with several options that are optimal for your situation.

Factors that come into play include:

1. How long you plan to keep the loan. If you plan to sell your home in a few years, you may want to consider an adjustable rate or balloon loan. If you plan to keep your home for a longer time, you may want to consider a fixed rate loan.
2. The trade off between rates and points. Points are considered prepaid interest and may be tax deductible. Each point is equal to 1 percent of the loan. For example 1 point on a $150,000 loan is $1,500. The more points you pay up front, the lower your interest rate. For a long-term loan, the money you save in interest may pay back your initial investment in points many times over.
3. There are also many other factors. What is the best down-payment amount? Are you better off with a first and second mortgage? Can you avoid PMI insurance? We are here to explain the issues to you so you can optimize your loan.
 

Step 4. Apply for your Loan
 

As soon as you are ready, we will have you sign all of the necessary paperwork, and formally apply for your loan.
 

Step 5. Obtain Loan Approval

Once your loan application has been received, we will start the loan approval process. This involves verifying your:
 

• Credit history
• Employment history
• Assets including your bank accounts, stocks, mutual fund and retirement accounts
• Property value
• Based on your specific situation, additional documents or verifications may be required.

To improve your chances of getting a loan approval:
 

• Please respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date.
• Do not make any major purchases. Do not buy a car, furniture or another house until your loan is closed. Anything that causes your debts to increase might have an adverse affect on your current application.
• Do not move money into your bank accounts unless it can be traced. If you are receiving money from friends, family or other relatives, please contact us.
• Do not go out of town around the closing date. If you do plan to be out of town when your loan is expected to close, you may sign a power of attorney, to authorize another individual to sign the final loan documents on your behalf.
• Notify your loan officer before applying for any other credit, including credit cards, personal loans or even with another mortgage company. Some loan programs have strict guidelines regarding your credit score. Credit inquiries may lower your credit score and may have an adverse affect on your loan approval.
   

Step 6. Close the Loan

After your loan is approved, you will be required to sign the final loan documents. This will normally take place in the presence of a notary public. Be prepared to:
 

• Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally NOT accepted.
• Review the final loan documents. Make sure that the interest rate and loan terms are what you were promised. Also, verify the accuracy of the name and address on the loan documents.
• Sign the loan documents. The notary will require that you have your picture ID with you. Some lenders also require to see your Social Security card.
  
  Your loan will normally close shortly after you have signed the loan documents. On refinance and home equity loan transactions, federal law requires that you have three days to review the documents before your loan transaction can close. Purchase transactions do not have a three day rescission period.