The Mortgage Loan Process – Major Milestones

Obtaining a mortgage loan can be a lengthy and cumbersome process. To make matters worse, it is entirely possible that even after you are pre-approved your loan could still fall through. While it is unlikely, it does happen on occasion. To combat the risk of a loan falling apart at the last minute, it is important to understand the likelihood of your loan closing during the five major stages of the mortgage loan process.

The pre-qualification process is the first stage of getting a mortgage loan. All that is required during this stage is a conversation with a lender in which you verbally provide your information.

During this stage, the information is not fact-checked. You are getting a quick snapshot of where you stand in regards to qualifying but the information you are providing is taken for face value and is not verified with documentation. Getting pre-qualified does not equate to a high likelihood of loan approval.

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The pre-approval process goes one major step further than the pre-qualification process. A mortgage lender verifies that the information you provided is correct by reviewing documents such as tax returns, pay stubs, bank statements, etc.

They also should run a credit check to verify your credit score and confirm that there are no lingering credit issues that might prevent a mortgage. Once you have a pre-approval letter, the odds of obtaining a mortgage loan increase significantly. For this reason, many listing agents often require a Pre-Approval letter from a lender to consider your offer.

The conditional loan approval process can only be completed once a client is in escrow on a specific property. The mortgage lender will take a full review of the loan file to verify details and review documentation. Their review is similar to the lenders with the pre-approval but it goes in much more detail and security. If you achieve a conditional loan approval, there is a high likelihood that you will be able to close your mortgage loan assuming there are no issues discovered during the appraisal process.

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Clear-to-close means that your loan is ready for closing. Barring any major unforeseen discoveries (i.e. sudden loss of a job), your loan is guaranteed to close. This status means your final loan documents can be drawn for you to sign and the mortgage loan can be closed.

After you sign your final loan documents, you will have to wire your funds needed to close (down payment, closing costs, etc) to Title. The mortgage lender will review your signed closing package and then fund your mortgage loan once they have completed their review. Either that same day, or the next, the transaction will be recorded with the county and you will be on your way to your new home. Congratulations!

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Oftentimes real estate agents advise sellers to take a cash offer even if that price is lower than an offer from another buyer who needs mortgage financing. Issues obtaining a mortgage loan are one of the most common reasons why properties fall out of escrow.

The odds of an escrow falling apart can be drastically reduced by working with a reputable mortgage lender and you can ensure a smooth loan process to your new home.

If you have questions about the loan process or how to get started, feel free to contact us

One of our Loan Officers will be pleased to help you.

This article was originally published by Tiffany Tran in www.bluefiremortgage.com