We recommend that every buyer get preapproved even before shopping for a home.
A preapproval lets you know the mortgage amount you qualify for and can be a great
negotiating tool when you find the perfect home.
When you find a home, you and the seller will negotiate terms for the sale of the house.
Items generally negotiated will be: purchase price, closing date and date of possession.
These terms will be stated in a purchase agreement and signed by both parties. Once you
have a signed purchase agreement, present it to your loan counselor. Your counselor will
help you select the mortgage that best meets your needs. You will then complete a
You can apply for a loan in person, over the phone, or online. When you apply, you’ll need to
provide income and asset documentation and verify your outstanding debts, and your
lender will need to pull and review your credit. The process takes about 20 to 30 minutes.
Most of the time when you apply for a mortgage you will receive an interest rate commitment
(rate lock) at the time of application. This will protect you from a potential rate increase
between the time you apply and the time your loan closes
After you apply, an appraisal of the property will be ordered to determine the property value.
An independent licensed appraiser will perform this appraisal. They’ll look over the house
and also consider sale prices of comparable houses in the neighborhood to determine an
independent value of your new property.
Once the appraisal is received, the loan file is submitted to the lender’s underwriting group.
This group will review the file and make a determination on approval. Loan approval is
usually obtained within three weeks of application.
Escrow: Title Work and Document Preparation
Escrow is the holding of funds and documents by a third party until all terms and conditions
of a contract have been met. In a real estate transaction, a title company will hold the funds
and documents until all of the instructions in the purchase agreement have been followed.
The escrow agent has the obligation to safeguard the funds and documents and to disburse
funds and convey title only until all provisions of the contract have been fulfilled. An escrow
account will be established to hold funds, such as your down payment and the bank’s payment
to the seller. The escrow agent will order a title exam to ensure that you’re receiving clear
title to the property. Loan documents, like the mortgage note and deed, will be prepared
The documents will be sent to the escrow agent for both you and the seller(s) to sign. You will
also bring any remaining funds that are due, such as the down payment, closing costs and
evidence of homeowner’s insurance.
Once all documents are signed and funds are collected, the escrow agent verifies that all
conditions of the contract have been met, and the title is transferred. The loan generally
closes the day after the title transfers, and funds are then disbursed to the seller. The entire
process, from purchase application through closing, usually takes approximately 30 days.
The title transfer and mortgage lien will be recorded at the county recorder’s office, usually
within 90 days.
Loan Documents and Disclosures
The mortgage application and closing process includes numerous documents and disclosures
that are presented to the borrower at various points in the process. The borrower must
receive the first group of disclosures, sometimes referred to as “early disclosures,” within 72
hours of mortgage application. This includes the loan estimate and understanding your
mortgage document. These documents summarize the loan you have applied for, and
include loan amount, interest rate, term, loan type, and closing costs. The signing package
includes the closing disclosure, loan agreement or note, and the mortgage (referred to
as the “deed of trust” in some states). The note or loan agreement specifies the terms you are
agreeing to as the borrower. It’s important to review this document because it specifies the
loan terms that you are agreeing to as the borrower.
Tracking Your Loan Progress
Most lenders offer a service to track your loan status online from application to closing.
At Third Federal, we offer an online loan status where you can check the status of your loan,
view and sign loan documents, send documentation requested to process your loan, and
view and print your appraisal.