First Time Buyer Stages Explained

Applying for a Florida Mortgage

The steps to getting a mortgage are relatively straightforward, once you get past all of the legal-jargon and bank talk. You will still need to understand what you are doing and we are here to assist you in comprehending the mumbo-jumbo before you put pen to paper and sign on the dotted line.


There Six Steps Involved in Obtaining a Mortgage Loan:

 

Sarasota Mortgage BrokersStep One: Fact Finding and the Pre-qualification Process-

  • How much do you earn?
  • How much are your monthly expenses?
  • How good is your credit?
  • How much can you pay each month?

You will authorize us to run your tri-merge credit report and score

We will walk you through a number of scenarios, by asking some simple and straightforward questions. From this, we will be able to give you an approximation of how much you can afford with the types of loan options available for you. Once this is completed, we will provide you with a pre-qualification letter, which is great bargaining clout when negotiating the purchase of a home. It states, in writing, that you have started the mortgage loan process and have a strong probability of being able to purchase a home.

 


Sarasota Mortgage BrokersStep Two: Moving forward to find a
 home-

The pre-qualification letter is a good guide for your licensed real estate professional to follow. Your agent should call and review your letter and its limitations before showing you a home that may fall out of your price range.

Important items that should be understood with the pre-qualification letter:

  • Maximum purchase price
  • Down payment or amount to be financed (loan to value, LTV)
  • Qualifying interest rate, not to be confused with the rate you will be Locked in at, later on.
  • Property taxes and homestead and other exemptions
  • Insurance cost, including flood and wind
  • Home owner’s association and condo association fees (HOA & COA)

These details about the property you are about to purchase will have a great effect on the total loan amount you are able to qualify for. You should review all these details prior to entering into a purchase and sales agreement. You and your agent should confirm these details with your loan originator to ensure they fall within the parameters of your pre-qualification letter.

 


Sarasota Mortgage BrokersStep Three: Disclosing Your Loan

Once you have a copy of your fully executed purchase and sales contract for the new home you are to purchase, please send that to your loan originator immediately.

There are time frames inside the financing contingency of that contract and timing is essential. What this does, is start the clock for your loan originator to properly disclose your mortgage loan details to you.

Your loan originator will ask you, or assist, in getting some insurance quotes to be able to more accurately produce your Loan Estimate (LE) along with the other proper disclosures to you. Included in this disclosure package is the “Letter of Intent to Proceed.” You will need to sign this and all the other disclosures before we can move forward with your mortgage loan. Remember, this is only an intent to proceed and not an obligation to accept or close on the loan.

 


Sarasota Mortgage BrokersStep Four: Setting Up Your File For Underwriting

Once we receive these disclosures back from you, we will send you a list of items we need to set up your file and get it ready for submission. This will include running DU, LP ,or GUS–this is a pre underwriting gauge that helps guide us to get any additional information that the underwriter may be looking for with your specific situation.

Once we have completed the bulk of the standard paperwork, your file will be submitted to the underwriter for review and conditional approval. Yes, conditional approval. I believe in waiting until your file comes back from the underwriting to see the conditions for approval, before ordering an appraisal and survey. Once we see the conditions and we are fairly confident that we can satisfy the conditions, we will then order the appraisal and survey. Remember, appraisals and surveys are paid by you–the applicant–whether you close on the loan or not.

 

Sarasota Mortgage BrokersStep Five: Approval With Conditions

This stage of the loan process tends to be the most frustrating time for borrowers and real estate agents. Everyone asks the same standard question “are we good yet?” At this time, we will review the conditions we need to meet to satisfy the underwriter for full loan approval. Getting these conditions satisfied is essential. Sometimes, these conditions or request for information may sound ridiculous to most people but they are requirements of both the lender and federal law.

Often times, you will submit the required paperwork as we requested only to create more conditions. Examples would be a bank statement. This new bank statement may contain a large deposit. The underwriter must verify the source of these deposits, as required under federal regulations.

 

Sarasota Mortgage BrokersStep Six: Clear To Close (CTC) And The Closing Disclosure (CD)

Nearing the end of the process, is to satisfy all the conditions, along with a satisfactory appraisal for closing–outlined by the underwriter. Once all the satisfied conditions have been sent to the underwriter for final review and approval, the underwriter will send us the Clear to Close (CTC).This is followed up immediately within 24 hours with the Closing Disclosure (CD). The CD has a three-business day minimum review or wait time once you, the borrower, receives and acknowledges the CD. It is important to acknowledge it, remember that it is still not a commitment or obligation to close on the mortgage loan, just an acknowledgement of receiving it.

At this point, your loan originator, processor, closing agent, or attorney will start working on finalizing the numbers for your closing. It is important to know that these numbers cannot grow higher and can only be lowered. The people listed will work hard at reducing the numbers to the actual expense. This CD must follow all the regulations of TILA and RESPA.

Some lenders, when a mortgage loan is substantially complete, may issue the CD prior to the CTC in order to meet the required closing date on your purchase and sales agreement. Once the CD is balanced out, everyone is satisfied, and we meet all legal obligations, we will schedule the closing.

The Desktop Underwriting (DU) program of Fannie Mae is similar to Freddie Mac’s LP and GUS from USDA. These automated programs give the mortgage broker or lender basic eligibility guidelines for that specific borrower. A report of Approved/Eligible with conditions is what the lender or mortgage broker is looking for. If we do not see this Approved/Eligible, we need to find out why not. We need to see what the potential borrower would need to correct, in order to get an Approved/Eligible and continue working on the loan process.

 


 

If you have any questions or would like further assistance please contact us directly and we will try our very best to help wherever possible.

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