Loan Processing and Underwriting

Loan processing and underwriting is a team effort, and we will keep you up to date during every step of the process. Following is an overview of what to expect.

Once your loan application has been completed, your loan officer will work with a dedicated loan processor who organizes all of the paperwork into one file. Your loan processor will make sure that the required documentation is in good order. If there are any missing documents, or any other information needs to be verified, your loan processor will contact you so everything can proceed smoothly.

You decide when to lock in your interest rate. This “rate lock” is an interest rate guarantee the lender makes to you for an agreed-upon time in order to protect you against interest rate fluctuations.

A real estate appraisal will be ordered when the home or property will be used as collateral for a loan. This professional written analysis of the fair market value of the home or property provides an estimate of the likely price the asset would bring if sold in a competitive real estate market.

A home inspection is recommended to evaluate the general quality of the home, such as its structural condition and remaining life of major components including the roof, plumbing, heating and electrical wiring. The buyer can often use the inspector’s findings to negotiate the final purchase price or other terms with the seller.

A title report is ordered. This important review of the property deed and other government records is done by a professional title company to determine whether the seller has a legitimate saleable interest in the property. It also summarizes whether any restrictions or allowances pertain to the use of the land, outlines the status of property taxes and other public or private assessments, and identifies whether any judgments or liens exist on the property that must be satisfied before the home or property can be sold.

Underwriting is initiated when the loan processor has verified that all paperwork has been completed. The team’s underwriter checks to make sure that the facts in the applicant’s loan file correspond with the guidelines of the loan being offered. The underwriter also reviews details such as income, credit score, source of down payment and the appraised value of the home or property. If any information is missing, the underwriter may conditionally approve the loan with the stipulation that the information must be attained and approved before the loan can be funded.

The loan processor resumes oversight of the loan file to track the receipt and condition of any pending documents, and works with the title company to get all of the paperwork in order for the loan settlement.

Certain types of insurance will be required. Title insurance is needed to protect the lender’s financial interest in the property if there are defects in property title, liens or other matters. Homeowners insurance is necessary to cover physical damage to the property. Depending on the home’s location, the buyer may also need to secure flood and/or earthquake insurance. If the down payment is less than 20% of the purchase price or appraised value, private mortgage insurance (PMI) may be required.