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The Loan Process
The loan process changes in different parts of
the United States. The explanation of the loan
process below is a general sequence of events
that takes place during the processing of your
loan. Different lenders in different states have
their own requirements. The descriptions below
are meant to give you a general idea of what is
required to go from applying for a loan to closing
the loan.
The first step - the loan application:
As might be expected, the first step in obtaining
home loan financing is to fill out the loan application
(also called a "Fannie Mae 1003", or
"Uniform Residential Loan Application").
An experienced loan officer will be happy to assist
you in filling out the loan application if you
should have any questions. We can help you make
an appointment to meet with a qualified Loan Officer
at your convenience if you desire.
When you meet with your Loan Officer, you will
discuss different possible loan programs available
to you that might best meet your needs, the interest
rates available, and your financial and property
qualifications for the loan program you've chosen.
After I fill out the application, what
happens next?
Once you have chosen a loan program and interest
rate, the application has been filled out and
you have provided the Loan Officer with the necessary
information, the Loan Officer will then send out
verification forms to verify your employment history
and bank account information, obtain your credit
report, order your preliminary title report from
the title company and order your appraisal. Once
this information is returned to them, they will
compile your loan documents and submit them to
the underwriter for final approval.
What does it mean when my loan is approved
"with conditions?"
Your loan may be approved as submitted, approved
with conditions, or a counter offer may be made
for your consideration. If there are conditions
on the loan in order for it to be approved as
submitted, your Loan Officer will work with you
to satisfy these conditions. Conditions might
include an explanation letter of some sort, copies
of investment documents, copies of divorce papers,
or any number of things that may help clarify
your qualifications for the loan.
After the loan conditions are met (if any) and
the loan is approved, the necessary documents
are prepared for closing. The lender will draw
up the necessary documents along with any (prior-to-funding)
conditions that have yet to be met, and in most
cases send them to a title or escrow company near
to where you live or your attorney to be signed
by you. Your escrow officer or attorney will arrange
for an appointment with you when the loan papers
are ready to be signed.
What does "Close Escrow" mean?
The task of closing the loan is normally the responsibility
of the escrow officer, attorney, or lender. This
person or company is responsible for gathering
together all of the necessary documents (deed
of trust, promissory note, etc.) and making sure
all documents are signed. Following the lenders
instructions, the escrow officer, attorney or
lender then calculates the various prorations,
charges and adjustments (interest on your old
loan, interest on your new loan, money for impound
accounts for taxes and insurance, etc.), makes
sure all of the funds are deposited (if any) and
provides you with a settlement statement showing
all of the costs involved in the loan. Whomever
handles the escrow responsibilities also makes
sure that all of the parties involved in the loan
process are paid after the loan funds. Your loan
will then "close escrow" and your new
loan will be recorded.
What is a "Right of Rescission?"
After you sign the loan papers, they are sent
to the lenders funding department where they do
a final check to see that everything is in order.
On a refinance, there is a 3-day right of rescission
period. This means that you have 3 days from the
day you sign the papers to change your mind about
following through with the loan. If you have not
exercised your right to rescind during the 3-day
right of rescission period, the funds are released.
The loan funds are then distributed to the proper
parties and the documents are recorded at the
county recorders office. The loan is done!
NOTE: There is no right of rescission on a purchase.
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