The
Loan Process
Lighthouse Mortgage, LLC is very proud of the fact that we have
successfully closed mortgage loans in as few as 6 business days.
However, we don’t like to set unrealistic expectations so
we want you, the client, to know that a normal or typical time frame,
for most transactions, is between 20 and 30 business days from application
to closing.
Delays in the loan process can develop into additional anxiety
if you are not properly prepared for them. A home purchase is stressful
enough without the additional anxiety resulting from unrealistic
expectations, so we have created this outline to help you further
understand how the loan process works. It is intended to give you
an overview of what goes on behind the scenes after you have completed
the loan application. By understanding the sequence of events, and
the delays that could take place and why, we hope to reduce the
potential for additional stress or frustration. Lighthouse Mortgage,
LLC prides itself in the fact that its loan officers will keep you
updated throughout the entire mortgage process in order to make
your mortgage experience with us a pleasant one.
PLEASE NOTE: Once we receive a complete loan application it is
usually in everyone’s best interest to close the loan as soon
as possible, so we work very hard to get that done. However, there
are certain required events in the loan process that require 3rd
party participation; (i.e. appraisals, surveys, and employment,
asset, rent or mortgage verifications) These events performed by
3rd party companies can cause delays. The delays caused by these
required events are non-intentional and beyond the control of any
lender. Lighthouse Mortgage has established long term, close working
relationships with its local appraisers and title companies. This
puts us in a better position to ask for quick service than large
national lenders and lenders based in other areas. Although you
are not required to use any of our current vendors, it is recommended
in order to keep the loan process flowing as smooth as possible.
The Loan Process: broken down into stages:
1. Loan Application is completed.
2. All initial supporting documentation is requested from borrower.
3. Loan application with supporting documentation is turned over
to the loan processor. (The loan processor is the loan officer’s
assistant. He/she is responsible for most of the “behind
the scenes” activity involved in the mortgage process.)
4. The loan processor examines the application and supporting
documentation to make sure the application accurately matches
the supporting documentation.
5. The application is submitted to an automated underwriting
system to obtain a processing level preliminary approval or pre-approval.
6. The processor requests any additional documentation that may
be required by the automated underwriting system.
7. Appraisal, Title work, and proof of homeowner’s insurance
are ordered.
8. After appraisal, title, any necessary verifications have been
performed and ALL documentation is returned to the loan processor,
the file is reviewed to make sure there are no problems with appraisal,
title, homeowner’s insurance or other new supporting documents.
(It is during this time frame, (after title work has been ordered),
that the title company orders the survey. The survey is usually
ordered by and delivered directly to the title company, not the
loan processor.)
9. The file is packaged in a specific stacking order and delivered
to underwriting.
10. The file is assigned to a specific underwriter and then that
underwriter reviews the entire file, resubmits the original processing
level approval through the automated underwriting system on the
underwriting level with any necessary changes that were dictated
by supporting documentation and then either issues the final underwriting
approval or asks for any additional documentation to account for
unusual or special characteristics of the file.
11. Once the final underwriting approval for the file has been
obtained and a clear to close has been issued, the loan documents
are ordered and the closing is tentatively scheduled.
12. The loan documents are prepared and closing instructions
are issued to the Title Company or attorney performing the closing.
13. The closing instructions and loan documents are used by the
closing company to prepare the preliminary HUD 1 Settlement Statement.
(The HUD 1 Settlement Statement details every cost involved in
the transaction.)
14. The preliminary HUD 1 is issued by the title company or closing
attorney for initial review by the loan officer. Any corrections
or necessary changes are requested by the loan officer.
15. After any necessary corrections are made, the final HUD 1
is issued and faxed or emailed to the client(s) and Realtors.
Either the loan officer or Realtor goes over the final HUD 1 Settlement
Statement with each perspective party to make sure they understand
it prior to closing.
16. The closing takes place and everyone sings the necessary
closing papers and the mortgage is funded.
17. The title company then sends any documents that require recording
to the county courthouse (where the property is located) for recording.
18. The title company ships the signed closing paperwork back
to the lender for post closing review.
19. The entire package is given a final review by the lender’s
post closing department to ensure it is complete.
We hope this outline helps you to more fully understand the intricacies
of the mortgage process.
The Loan Process: possible delays:
The list below represents a more detailed description of many of
the events mentioned above that occur during the loan process and
some examples of delays that each event may cause.
Verifications of Assets, Employment, Rent or Mortgage
Items subject to written verification such as employment, income,
and asset balances all require 3rd party written verification. Delays
can take place if your employer or other verifying entity is not
quick to respond to our request for documentation.
Title Work
In order to obtain a mortgage, all real estate is subject to an
abstract of title performed by a 3rd party company. This is the
process of looking through public records to verify what liens exist
and insure the subject property is free of title defects. The abstract
is performed by an attorney or title examiner and delays can occur
based upon availability and or scheduling. Additional delays can
result if the title is not clear and items need to be remedied.
For example an unpaid contractor placed a mechanic’s lien
on the property or a release for an old mortgage on the subject
property was never recorded or misfiled at the courthouse.
Appraisal
An appraisal is required in order to determine the fair market value
of the property. The appraisal is conducted by a third party company
and can be delayed due to scheduling. Other examples of appraisal
related delays could be the subject property appraising for less
than the sale price or the appraiser calling for structural, mechanical,
environmental or other inspections.
Survey
A survey is typically required and the survey is conducted by 3rd
party company. Delays can occur from scheduling or from the findings
of the survey. For example an item such as the neighbor's fence
is encroaching on the subject property, which would require a resolution
prior to closing.
Summary
These are just some of the items that can cause delays in the loan
process. It is very important to realize delays can happen. It is
even more important to remember you can rely on Lighthouse Mortgage,
LLC to help guide you through whatever comes up.
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