The Loan Process, Step by Step
From your first conversation to closing day, here's exactly what happens at each stage - and what we'll need from you along the way.
What happens after you apply
Pre-Qualification
Pre-qualification happens before the loan process actually begins. We gather information about your income and debts and make a financial determination about how much home you may be able to afford.
It's a good idea to know how expensive a home you can afford before you start shopping for one. If you're refinancing, pre-qualification helps you decide whether it's a good move in the first place.
Application
The application is the beginning of the loan process and either occurs after you've found a property you want to buy or decided to refinance your existing home. You complete a mortgage application for a particular loan program and supply all of the required documentation for processing. Various fees and down payment options are discussed at this time.
Your loan officer will deliver a Loan Estimate and required disclosures within three days that itemize the rates and estimated costs for obtaining the loan.
Processing
Your application package is typically submitted to an automated underwriting system that determines the documentation needed for approval. In some cases the loan may also be manually underwritten.
A processor reviews your credit reports and documentation to verify employment, debts, and payment histories. If there are unacceptable late payments, collections, or judgments, the processor requests a written explanation from you. They also review the appraisal and survey and check for property issues that may affect final approval - assembling the full application package for the underwriter.
Underwriting
The underwriter determines whether the application package prepared by the processor meets all of the lender's criteria. If more information is needed, the loan is put into "suspense" and you'll be contacted to supply additional documentation.
Once approved, the lender issues a conditional commitment to lend, orders title insurance, works with you to clear all remaining conditions, and schedules a closing time. Conditions may involve credit, income, or property issues that came up during processing.
Closing
Closing happens once all conditions are cleared and the lender issues full loan approval. The lender funds the loan via cashier's check, draft, or wire to the closing agent, who disburses funds in exchange for the title transfer. This is the point where you finish the loan process and actually buy or refinance the home.
Closings work a little differently depending on the state - some require a closing attorney's office, others use a title or escrow company, and in some cases you may be able to close at home.
Have questions about where you'd fit in this process?
Talk to a local Coltrain loan officer - no pressure, no obligation.