In order to purchase or refinance a loan, the lender may require documentation to verify and substantiate your employment, credit, and financial situation to verify that you have the ability to repay the loan. This documentation may consist of tax returns, recent pay stubs, bank statements, rental or mortgage history verification, appraisal, purchase agreement, divorce decrees, bankruptcy papers, and any other information the lender deems necessary.
Complete Your Application
You will have to provide a completed loan application and the requested documentation to your loan officer. The loan officer will be the intermediary between you and the lender/underwriter. The underwriter is the person who goes through the information/documentation you have provided with a fine-tooth comb to make sure everything fits the program requirements. You will not be able to speak with the underwriter as it is the loan officer’s job to communicate information between all parties.
The Waiting Game
Expect to wait. It may take several days to a week to get the initial response from the underwriter. The underwriter will either approve the loan as it is, or more likely, will provide a list of items that need clarification or additional documentation.
Expect to be asked to provide additional items. Once you give these to your loan officer, it will be a few days before you hear back again. The underwriter may come back to the loan officer several times with certain “conditions.” There’s no reason to worry about this as it is commonplace when going through the process. The underwriter is simply doing an underwriter’s job. At this point, what you have is a conditional approval – meaning, your loan is approved pending acceptance of these conditions.
Understand that the entire loan process typically takes between two and four weeks, possibly longer, depending on the particular circumstances of the loan. Loans for self-employed people, people with poor credit, or people with unusual circumstances often take longer because of the additional documentation required.
Realize that once the loan is approved, the loan papers will be sent to the escrow/title company or your attorney. The escrow officer or attorney will add other documents to the file created from information received from the lender. Once these documents are prepared, the escrow officer or attorney will contact you to set up an appointment for you to come in and sign your papers.
Expect to sign several papers at the closing table. The escrow officer or attorney will provide you with a copy of everything you sign.
If you are purchasing a home or refinancing and investment property, the loan should fund on the day you sign the papers. If you are refinancing your primary residence, you have a three day rescission period before the loan funds. This three day period gives you a chance to look over the loan papers and decide if you want to keep the new loan.
The loan and mortgage will get recorded with the county one or two days after the loan has been funded. Once the loan is recorded, the transaction is complete.