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PREQUALIFICATION
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There are
four areas of analysis to qualify
a buyer:
- Income - How you earn your income, and how much;
job stability
& continuity;
- Debt - Current
long-term debt;
- Savings - Current Fixed & Liquid Assets for
Cash Down & Cash Reserves; 90-day audit trail
on funds;
- Credit - The Buyer's Willingness & Ability
to pay their debts.
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LOAN PRODUCT
SELECTION
Like a bank, a Licensed Mortgage
Broker has a menu of Loan Products to offer to the Buyer - only
the menu is much larger. We have what is called "Correspondent
Relationships" - contract relationships - with various local,
regional and national lenders to offer their products to our
clients. To effectively compete in the market, the "Correspondent"
is offered Wholesale Pricing on all of the products a lender
has to offer.
Based on the buyers wants
and needs, a product is selected. The Licensed Mortgage Broker
is required by law to provide the Buyer with :
Good
- Faith Estimate
of Closing Costs &
Truth-In-Lending disclosures
The Broker must provide these
Disclosures to the Buyer within 72 hours of a face-to-face Application,
or within 72 hours of receipt of the Application via mail
from the Buyer.
SEE
SAMPLE GOOD FAITH ESTIMATES
OF CLOSING COSTS!! |
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THE LOAN
APPLICATION
During the Prequalification/Interview
phase, the Buyer's answer to the Prequalification questions are
placed on a Loan Application, which is then reviewed and signed
by the Buyer.
At this time, the Buyer provides
documentation to support the information on the Loan Application.
Hopefully, the Mortgage Broker has asked for these documents
at the first contact with the Buyer over the telephone. These
documents are reviewed, copied and returned to the Buyer. The
final step in this phase is the receipt by the Mortgage Broker
of the monies necessary to begin the Loan Process:
- Appraisal Fee - Used by the Mortgage Broker to order the
Appraisal (an Appraisal can not be ordered without this upfront
fee);
- Credit Report
Fee - Used by the Mortgage
Broker to order the Credit Report (again, the Report can not
be ordered without this upfront fee).
NOTE: The Appraisal and Credit Report Fees are
credited towards the Buyer's Total Closing Costs, and are documented
on page #3, Section 5, and at the bottom-left side of the Good-Faith
Estimate. |
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LOAN PROCESSING
The processing of a loan
request is the heart of the mortgage business. The Licensed Mortgage
Broker develops a strategy by which the loan request will be
approved. The Mortgage Broker is the "artist" and the
Buyer provides the "paint" for the Mortgage Broker
to "draw a picture" to the Lender for the loan to be
approved. The definitions of the elements of Loan Processing
can be found in the Glossary Section.
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LOAN APPROVAL
&
PRE-CLOSING EVENTS
Once the loan is approved,
it is documented in writing to the client within 3 days of verbal
loan approval. For FULL loan approval - which begins the process
of closing document generation - all conditions (i.e., Prior-To-Closing
(PTC) of the loan approval must be satisfied before the Underwriter
authorizes the loan closing documents to be generated. Conditions
may include (but not
limited to):
- Evidence of clear
Title;
- Evidence of clear
Pest Inspection;
- Satisfactory
Survey;
- Proof of adequate
Homeowner's Insurance
and possibly Floor Insurance.
IMPORTANT NOTES:
Customarily - unless the
loan is scheduled as a "quick-close" - Pest, Survey
& Insurance(s) are not ordered/requested until Loan Approval.
As such, IT
IS IMPORTANT that the insurance research/selection process be
started & completed significantly "prior-to" Loan
Approval.
What
you will need to get an accurate quote for homeowners' insurance:
- Property Replacement
Cost -
found on the appraisal on page #2, it is the biggest factor which
influences the insurance quote.
- Square Footage of the Living Area of the property.
- Home Construction, i.e., Frame, Concrete/Brick/Stucco (CBS),
steel;
- Roof Type , i.e., Shingle, Tile;
- Pool (Yes or No)
- Age of the property.
- IF FLOOD INSURANCE
IS REQUIRED: An Elevation
Certificate, establishing the height of the property floor above
sea level determines the insurance premium. The higher the elevation,
the lower the premium. The Elevation Certificate is generated
by a Survey crew who are contracted to do the home Survey.
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LOAN CLOSING
Once all PTC's have been
satisfied, the Underwriter authorizes that the Closing Documents
be generated.
The documents include:
- Promissory Note - your
written contract with the lender to promise to repay the Note;
- Mortgage instrument - your written permission for the lender to
Securitize the Promissory Note by
using your property
as collateral;
- Servicing Disclosures - lenders declaration of the probability of
selling your loan after closing, as well as the Real Estate Settlement
Procedures Act (RESPA) which protects you from changes in any
conditions of the loan as agreed upon between you the the previous
(original) lender;
- Warranty Deed - recorded by the Title Agent/Real Estate attorney
in the local county courthouse. Establishes your ownership of
the property after closing.
NOTE: The recorded Warranty Deed establishes your
ownership of the property.
You must make
sure you
receive a copy of the recorded Warranty Deed from the Title representative.
You should
receive your copy of the recorded Deed within maximum 2 -3 weeks
after closing.
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