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Mike Hubrich  502 296 1815
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How to begin the Mortgage Process

The mortgage process actually begins with a pre-qualification effort. No matter 
where you go for your mortgage, you will be dealing with someone who is either
a Loan Officer or a Loan Consultant.


The purpose of the Loan Officer or Loan Consultant is to determine if you can 
qualify for a mortgage, and on some level, what type of mortgage will work best 
for you. These individuals can assist, especially if you don’t know what type
of  mortgage plan you need or what you can afford. The Loan Consultant is not a 
salesperson, nor do they have any direct authority in how, or if, a mortgage 
will be approved. Their role is guiding the borrower through the process, and 
functioning as the borrower’s advocate. They work on the borrower’s behalf, not 
the lender’s.


Getting Started
The Loan Consultant will ask you questions regarding your credit, your 
income, and any plans you may have for the property you are either purchasing
or  refinancing. You answers to these questions will help them to develop a plan
or  direction. The Loan Consultant may determine that your chances for obtaining
a  mortgage are very slim or nonexistent. They will then explain why, and how
you  may correct or improve your borrowing profile.


However, if you’re a good candidate for a mortgage, the loan consultant will 
suggest moving forward to obtain a more formal pre-approval for you. During this 
phase borrower’s will discover what type of mortgage they can qualify for, its 
pricing and terms, and the requirements needed in order for them to obtain
final  approval.


A formal pre-approval through an actual lender, can typically be achieved in 
24-48 hours. This requires the loan consultant to pull a tri-merged credit 
report from the three major credit bureaus. Since all credit bureaus assign a 
credit score (or what many people refer to as a FICO score), the loan
consultant  will be looking to see what the borrower’s middle or mid-score FICO
is. For most  borrowers, the 3 FICO scores assigned to their reports are varying
numbers, so  your mid-score FICO is typically the borrower’s qualifying
score.


There are also two forms that are standard and universally used by all 
brokers and lenders in the mortgage field. The first is the Uniform Residential 
Loan Application (commonly referred to as the “1003”); and the second, shorter 
version, of this form is called the “1008.” The Loan Consultant will complete 
both of these forms for the borrower, and along with a copy of the borrower’s 
tri-merged credit report, will submit these three items to the lender(s) who 
would be most likely approve and fund the borrower’s mortgage.


A pre-approval is usually valid for 30 days and no longer, although this can 
vary depending on the lender. The reason is that a borrower’s profile can 
change, with credit scores going up or down. A borrower’s employment situation 
may alter, or the market itself may fluctuate.


Reviewing the Submission
Lenders will then review the submitted information, and providing the 
borrowers meeting their guidelines, will then offer pricing (i.e. interest
rates  and terms) and conditions that need to be met, relative to lending the
borrower  the funds required. This submission process between broker and lender
is how all  brokers and lenders work together to fund mortgages.


Obtaining Your Mortgage
After a pre-approval has been obtained, a borrower who's going to purchase a 
home can begin the house hunt; knowing what price is affordable, what the 
monthly payments will be, and will have the confidence in purchasing as a 
pre-approved buyer. Once a suitable or desirable property is located, the 
borrower then needs to secure a valid purchase contract on the property.


After the borrower has secured the purchase agreement or sales contract, it's 
important for the borrower to provide a copy of the contract to the loan 
consultant. The next step will be getting the property appraised.


Obtaining a satisfactory appraisal is an important step in getting a final 
approval for the mortgage. The property being purchased must appraise for at 
least the purchase price. If it does not, the borrower will have the option of 
cancelling the sale, renegotiating the purchase price, or if the borrower
wishes  to proceed with the purchase at the agreed price, will have to come up
with the  difference in the purchase price and the appraised value.


While an appraisal is being performed, the lender, with the assistance of the 
loan consultant and the loan processor, is undertaking what is sometimes
called,  "due diligence". Things like the borrower's employment, rent or
mortgage  history, sources of assets, and so on, are being verified by the
lender. The  information, which the borrower had provided to the loan consultant
during  application, is now being verified.


The process is almost at its final stage. Usually, the appraisal is the last 
step before the borrower's mortgage file can be completed by the loan
consultant  and processor, and then submitted to the lender's final underwriting
review for  approval. The lender's underwriter or underwriting team will usually
complete  this process in 24-48 hours. They will review the loan to see if all
of the  conditions have been satisfied. After which, assuming final approval is
granted,  the mortgage will move from underwriting to the lender's scheduling
department  for closing and funding.


Generally, the "closing documents" which are all the many papers a borrower 
signs at closing, are generated within 24 hours of the loan being scheduled for 
closing. These papers are usually e-mailed to the title company or escrow
agency  that is handling the closing. The borrower is then contacted by a title
or  escrow officer for a signing appointment. At this point, the process draws
to a  close, and the borrower has now officially purchased or refinanced a 
home.