The Home Loan Process

Many borrowers have had multiple experiences with real estate loans and have a pretty good idea of what kind of a loan they want. First time home buyers and borrowers with limited experience in the loan process will require a clear understanding of their options so they can make intelligent choices when deciding which product is right for them. Advise is given only in the clients best interests, considering short and long term goals and overall lowest cost.

Once a loan program is determined, optional rates (when available) are offered for "no cost" and "cost" loans are quoted. The payback period for loans with costs is determined by dividing tranaction costs by the monthly savings in loan payments when compared to a "no cost" loan.

An application is then started by furnishing general information over the phone and then mailed, emailed or faxed to the borrower for signatures accompanied by a list of required documentation. Included is a disclosure including an estimate of all costs and fees (if applicable) associated with their loan. "No Cost" loans include a credit for all Non Recurring Closing Costs, that is, all costs other than taxes, insurance and interest charges. On rare occasions, unusual charges are excluded and the borrower is informed upfront.

Upon receipt of the signed application and documentation, MLS will attempt to "lock" the loan at the quoted rate. Occasionally the rate will change before the application is received. If the rate has gone down, the borrower is locked at the lower rate and the borrower is so advised. If the rate is higher, the borrower is contacted and is given the option of accepting the new rate or waiting for the rate to come back down to an agreed upon rate. Rates from lenders change frequently. It is not unusual for a lender to change rates several times per day.

Most loan locks are for either 30 or 45 days. It cost more to lock a loan for longer periods. Loan lock extensions are limited and expensive, usually costing 1/4 percent or more of the loan amount for 15 additional days. The quoted rate includes a loan lock for the expected period MLS estimates it will take to close the loan. In most cases a borrower who is punctual in providing documentation and appraisal access will never be asked to pay for extending a loan lock. Loans suspended due to credit, title or incomplete documentation are commonly reasons for exceeding a lock period. Lenders have different policies in regards to re-locking loans. Most require at least 30 days after expiration before you can relock. Locks must be extended before they expire. An option to a loan that has expired is to relock and re-submit with another lender.

After the loan is locked, an appraisal is ordered and the loan is usually submitted to the lender. A few lenders require an appraisal to be included before submitting. Most will conditionally approve the loan based upon an acceptable appraisal.

Loan approval usually includes a variety of conditions unique to the lenders requirements. Most of these conditions are minor and require readily available documentation or a simple explaination. MLS will make satisfying these conditions as easy as possible for you.

Documents are then ordered and your signing is scheduled as soon as the lenders documents arrive at the title company. A signing service is available to come to your home or place of business for a charge.

The documents are returned to the lender and funding is scheduled. Borrowers who are refinancing are required by law to wait a three day rescission period before funds can be dispursed. During this time, you have an option to cancel the loan by calling and leaving a message with the title officer or faxing the title company your intent to cancel your loan.