• Tel: (208) 580-4947
    Email: nick@sundialcapitalllc.com

  • The Pre-Approval Process

    A few things have changed since the real estate meltdown a few years ago. For purchase transactions, real estate agents will first want to know if you can get a loan. In the old days, financial institutions were doling out money to anyone with a heartbeat. Unfortunately, soft lending standards helped fuel an eventual rash of foreclosures. Suffice it to say, conditions on the ground have changed since then. Today, the best way to approach a real estate agent is with a lender pre-approval in hand. It shows that you’re ready and able to buy.

    Pre-approvals don't take much time. They involve pulling a three-bureau credit report (called a tri-merge) that shows your credit score and credit history as reported by third-party, respected institutions. Within the credit report, a lender can see your payment history (to see if payment obligations have been on-time and in-full) and your lines of credit (past and present).

    Your lender will be able to pinpoint a loan amount for which you qualify. This pre-approval will save you a lot of time since you will be able to focus exclusively on houses in your price range.

    Mortgage pre-approvals also signal to the seller that you’re a serious buyer. Being prepared is particularly useful when making an offer on a house. If you intend to negotiate the deal (and why wouldn’t you?), a pre-approval gives your offer a little extra gravity. Being ready to go can also help in a hot market where it's not uncommon for sellers to entertain multiple, simultaneous offers. Sellers tend to focus on the path of least resistance: the buyer who is pre-approved.

    Mortgage Pre-Qualification

     

    As you do your online research, you may read the term mortgage pre-qualification. It is not the same as pre-approval, and it’s important to know the difference.

    A pre-qualification is a less meaningful measure of a person’s actual ability to get a loan. It’s a very lightweight “at a glance” look at a borrower’s credit and capacity to repay a mortgage. It’s usually determined by a loan officer asking a potential borrower a few basic questions like, “How is your credit?” There’s no third-party verification of the borrower’s answers. While the conversation with a loan officer can be helpful for other reasons, there’s no tangible result that proves anything to anyone (like to your real estate agent or a seller).

    Getting Organized

     

    During the pre-approval phase, one of the best things to do is to gather up documents needed for mortgage pre-approval. Anything you can do, to prepare in advance, will reduce the stress when you find the right home and make an offer. At that stage, you’ll be able to hand over all your paperwork to your loan officer at once. Being ready is a solid move!

  • Loan Processing

    • The Mortgage Consultant collects and verifies all documents necessary to prepare the loan file for underwriting. These documents provide us with everything that we need to know about you (the borrower), and the property you are financing.
    • During processing, the Mortgage Consultant:
      • Begins verifying assets, income and employment
      • Orders a home appraisal to determine the value of the property (if/when needed)
      • Runs various compliance and eligibility checks to ensure the process advances quickly and smoothly
    • Common documentation requested by underwriting includes:
      • Evidence of Earnest Money
      • Asset Verification
      • Borrower Letter of Explanation (LOX)
      • Gift Letter
      • Copy of Note
      • Source Large Deposits
      • Verification of Employment (VOE)
      • Fully Executed Sales Contract
    • Next step: Processing submits the loan file to underwriting for initial review and approval.
  • Underwriting the Loan

    • The Underwriter begins reviewing all documentation to determine whether you qualify for a mortgage.
    • While the Loan Officer and Mortgage Consultant will do their best to submit a complete file, an Underwriter may still have questions and/or require additional documentation to satisfy any conditions for a final approval.
    • In addition to the loan file submitted by processing, the Underwriter examines:
      • The completed appraisal
      • Credit report
      • Other ancillary documentation pertinent to the loan
    • If the loan is approved, the borrower receives a list of conditions required to be met before receiving final approval and notification of Clear to Close.
    • Next step: The Loan Coordinator provides you with underwriting's preliminary decision on the loan.
  • Conditional Approval through Final Approval

    • A conditional approval means that the Underwriter has signed-off on the parameters of the loan and most of the documentation, but still needs a few more items before fully approving the borrower for the loan.
    • The Loan Coordinator contacts you to review the conditional approval and discuss any additional required items, as well as any ancillary documents that are needed to finalize the loan. This documentation can include:
      • The completed appraisal (or updates to the existing report)
      • Additional verifications
      • Standard in-house items required for closing
    • Once all conditions have been obtained, the Loan Coordinator will send the file back to the underwriter for a final review and approval.
    • Once the loan is approved, a Mortgage Professional will schedule the closing.
    • "Clear to Close" means the Underwriter has signed-off on all documents and issued a final approval.
    • The mortgage team schedules your closing and reviews the Closing Disclosure (CD).
      • The CD is the standardized document that details the finalized terms for the loan, including a breakdown of all costs and fees.
    • Next step: Closing the mortgage.
  • The Closing

    • Closing processes vary slightly depending on the type of transaction, as well as local, state and municipal laws.
    • The type of transaction—purchase or refinance—determines who can provide you with accurate final numbers.
      • Purchase: You can receive estimated figures from your Mortgage Professional, but they'll need to speak with your local title company or real estate attorney for a final amount.
      • Refinance: In most states, you won't be required to use an attorney to close. In that case, you should speak with your Mortgage Professional for the bottom-line.
    • What to bring to the closing:
      • Photo identification
      • Personal check or bank check from an approved account to cover the closing costs and down payment (unless the money was wired). NOTE: Your mortgage team will advise the best way to transfer funds for your closing.
    • Whether purchasing or refinancing, prepare to sign a lot of documents!
      • Purchase: While the process varies by state, typically a professional explains every document and notes where to sign. The lender’s wire may need to clear before you're handed the house keys and provided with copies of all the documents.
      • Refinance: Depending on local laws, an agent from the title company will explain each document to be signed. If refinancing a primary residence, the loan will fund once the 3-day right of rescission has expired (on the fourth day). Once the rescission period has expired, the loan can no longer be cancelled. If refinancing an investment property or second home, the loan will fund on the same day.
    • Next step: Funding the mortgage.
  • Funding the Loan

    • The final step on the loan process is now complete: Your loan has funded!
    • At this time, all documentation is complete and the funds for the loan have been disbursed to the seller (purchase) or to the payoff of the prior loan (refinance).
    • You should receive your first payment statement at the closing. This should be used to make the first and possibly second loan payment.
      • If you did not receive the statement or cannot find it, you can reach out to your Mortgage Professional for a copy
    • Final step: You'll receive correspondence in the mail from the final servicer (the company to which you will make all subsequent payments). This information details where to make future payments and how to set up auto-pay if desired.
DO YOU NEED A FAST CLOSING?

At Sundial Capital, we understand time is money. That is why we use our efficient process to close the average loan in 14 days. Check to see if you qualify now!