The Purchase Mortgage Life Cycle
Pre-Life Cycle
Running The Numbers – Should I Buy?
Review your monthly budget and current savings to determine whether buying now is a good idea and if so, how much you have for a down payment and how much you want to spend each month to own a home. It is important to determine a comfortable monthly and down payment for your situation. If you have any questions it is usually helpful to discuss these numbers with a lender who can walk you through the best available options.
Pre-Life Cycle
Pre-Approval & Home Shopping
Once you have decided on your mortgage lender you will want to get pre-approved. This process reviews your financials including your income, assets, debts and credit report and will help determine your maximum home purchase price, loan amount and the best loan options, rates and terms. You will then be able to obtain a pre-approval letter which will strengthen your new home offer.
Day 1-3
Accepted Offer & Submit Your Loan Application
You’ve spent a few days (and probably sleepless nights) negotiating with the seller of your new home and signing purchase contracts but you’ve finally received an accepted offer on your dream house! Simultaneously you have submitted your full mortgage loan application – this basically just means the lender now has the address of your new home and the signed purchase contract.
Day 3
Disclosures
Now the fun stuff! You will receive your initial disclosures by day three of the mortgage life cycle which includes the Loan Estimate. The Loan Estimate provides a breakdown of every preliminary transaction figure including the purchase price, loan amount, interest rate, closing costs, etc. It is important to note that not all of the figures included within the Loan Estimate are 100% accurate – some figures can change throughout the process. Lastly, you’ll want to acknowledge, e-sign or ink-sign these disclosures as this initiates a regulatory waiting period and provides the lender the “intent to proceed.”
Day 3-14
Appraisal Report & Misc Documentation
The appraisal is usually ordered after the initial disclosures are acknowledged/the intent to proceed is obtained. The appraisal report turn-time is market specific and dependent a few factors including supply of appraisers, number of appraisal orders, etc. The average appraisal turn-time will average anywhere between 7-14 calendars days. While you’re waiting for the appraisal report to come in your lender will have asked for a few follow up pieces of documentation (e.g. bank statement, paystub, letter of explanation, etc.). In the mortgage world these requests are usually called “conditions.”
Day 7-14
Final Approval and Closing Disclosures
Once the appraisal report has been received along with any other follow up documentation or conditions the loan package is sent to underwriting for final approval. When full approval is obtained you will then receive a Closing Disclosure (CD) for your review which will contain all of the final transaction figures. At this point each figure should be 100% accurate. If you sign-off on this CD the closing department and escrow company will work on generating closing documentation.
Day 15-30
Funding & Closing
You will receive a call from the title/escrow company who will schedule the loan closing documentation signing which usually occurs at the title/escrow office or wherever convenient for you (home, coffee shop, etc.). Once the loan closing documentation is signed the loan will “fund” and title will distribute the funds to the appropriate parties (seller, realtors, etc.) and the property title will be transferred or “deeded” into your name. At this point you are now the proud owner of your new home!