The Loan Process

When you submit a loan application to a mortgage lender, a detailed process is set in motion.

In the PREAPPROVAL stage, the lender will:

  • Obtain a credit report indicating your FICO score.  Be prepared to explain negative items on your credit report, and be aware that different lenders may have different guidelines regarding an acceptable minimum FICO score.
  • Verify your income.
  • Verify your source of funds.  The lender will need to verify adequate funds available to cover the down payment and closing costs.  The lender will also need to verify that some funds will remain available as “reserves” after the down payment and closing costs are paid.  Different lenders may have different reserve requirements.

As soon as you enter escrow on a property, the escrow officer will make contact with your lender.  The lender will require the escrow officer to provide:

  • A certified copy of the escrow instructions and purchase contract.
  • The preliminary title report.

After receiving the escrow instructions, purchase contract and title report, the lender will order an appraisal of the property to determine the fair market value of the property you are purchasing, and thus make sure you are not paying more for the property than it is worth.

After receiving the appraisal report, then lender will be ready to submit the loan package to their underwriting division for final approval.

The underwriter may require re-verification of your funds, income and creditworthiness, or ask for additional verification of  items on your credit history.  The underwriter may also require further information about any conditions noted in the appraiser’s report.

When the underwriter’s review of the file is complete, the underwriter will notify the escrow officer that your loan is approved subject to various conditions.

There will be “PRE-DOC” conditions that must be met before the loan documents are issued.   These conditions are usually for forms and documents that the escrow officer will generate and forward to the underwriter.

And there will be “FUNDING” conditions.  These are items that must be delivered to the underwriter before the loan can be funded.  An example of a funding condition would be proof that the buyer has a fire insurance policy ready to take effect upon closing.

After the PRE-DOC conditions are met, the lender will email or deliver loan documents to the escrow officer. The escrow officer will contact the buyer for an appointment to sign the documents. Buyers are well advised to sign loan documents as soon as possible!

After the buyer signs the documents, the escrow officer will “package” them with FUNDING conditions from the escrow file, such as proof of insurance, and return all the documents to the lender. The lender will most likely receive the documents back on the day after the buyer has signed them.

After the lender receives the signed documents back, it can take up to 72 hours for the lender to check the documents in and review them. After the lender reviews the documents to be sure they have been fully and correctly signed, the lender will issue the funds.

The funds are wired by the lender to the escrow company. Recording of the grant deed is scheduled for the next business page after the funds are received.

In California, the sale is considered “closed” on the day that the grant deed is recorded.

If you have any questions, please do not hesitate to contact us at 888.283.0999 Ext. 100.