Pre-Qualification
The loan process always starts with pre-qualification. Once we gather information about a borrower’s income and debts, we can pretty much determine how much he or she can pay for a house. Since different loan programs can cause different valuations, you should get pre-qualified for each loan type for which you --as the borrower-- may qualify.
When working to approve homebuyers for the type and amount of mortgage loan they want, mortgage companies look at the borrower’s ability and willingness to repay the loan.
We verify ability to repay the mortgage by your current employment and total income. Generally speaking, mortgage companies prefer people employed at the same place for at least two years, or at least be in the same line of work for a few years.
We determine willingness to repay by examining how a borrower intends to use the property. For example, will you live there or rent the property to someone else? Willingness is also related to how people have fulfilled previous financial commitments. The Credit Report and/or your rental payment history play an important role.
The rules are not absolute. We consider each applicant on a case-by-case basis. If you have challenges in one area, your strengths could make up for your weaknesses. Mortgage companies only stay in business by generating loans. It’s in everyone’s best interest for you to qualify.

Mortgage Programs and Rates
When considering different Mortgage Programs, think about how long you plan to keep your loan. If you plan to sell the house in a few years, an adjustable or balloon loan could make the most sense. If you plan to keep the house longer, it may be more appropriate to get a fixed loan.
Shopping for a loan can be very time-consuming and frustrating. Each of the many programs has different rates, points and fees. To help you make an informed decision, our mortgage professional experts will evaluate your situation and recommend the most suitable Mortgage Program.
Call today and ask about our No Closing Cost Option Mortgage!

The Application
The loan process truly starts with the application. Somewhere between day one and five, the borrower completes the application and provides all the Required Documentation. Feel free to contact your mortgage professional for help.
While examining the many Mortgage Programs, we will discuss the various fees and closing cost estimates. Within three days of the submission of the application, the lender will send verification of these costs via the Good Faith Estimate (GFE) and a Truth-In-Lending Statement (TIL).

Processing
Once the application has been submitted, we begin processing your mortgage. The Processor orders the Credit Report, Appraisal, and Title Report. We then verify application information such as bank deposits and payment histories. A written explanation is required for anything derogatory on your credit, such as late payments, collections and/or judgments. The Processor examines the Appraisal and Title Report for property issues requiring further investigation. They then assemble the entire mortgage package for submission to the lender. To ensure your loan is handled quickly and efficiently, they help guide your loan through the lender’s underwriting department all the way to closing.

Required Documents
If you are salaried you will need to provide the past two-years W-2s and one month of pay-stubs.
If you are self-employed, you will need to provide the past two-years tax returns.
If you own rental property you will need to provide Rental Agreements and the past two-years tax returns.
To speed up the approval process, you should also provide the past two months bank statements and most recent stock and/or mutual fund account statements. Also, provide the most recent copies of all your stock brokerage or IRA/401k accounts.
If you are requesting cash-out you will need to fill out a letter of explanation describing the reason for the cash-out.
Provide a copy of your divorce decree if applicable.
If you are not a US citizen, provide a copy of your green card (both front and back), or if you are NOT a permanent resident provide your H-1 or L-1 visa.
If you are applying for a Home Equity Loan you will need to provide a copy of your first mortgage note and deed of trust, in addition to the documents above. You can usually find the first mortgage and deed of trust in your mortgage closing documents.

Credit Reports
Most people applying for a home mortgage have nothing to worry about during the mortgage process concerning the effects of their credit history. By getting a copy of your Credit Report before you apply for your mortgage, however, you will be better prepared. You can take steps to correct any negatives before making your application.
A Credit Profile refers to a consumer credit file compiled by various consumer credit reporting agencies. It shows a snapshot of how you paid back the companies from which you borrowed money, or how you have met other financial obligations.

Categories of information on a credit profile include:
• Identifying Information
• Employment Information
• Credit Information
• Public Record Information
• Inquiries

NOT included on your credit profile is race, religion, health, driving record, criminal record, political preference, or income.
If you have had credit problems, be prepared to discuss them honestly with your mortgage professional. He or she will help you write your "Letter of Explanation." Legitimate reasons for credit problems may include unemployment, illness or other financial difficulties. When problems have been corrected, credit is reestablished, and payments have been on time for a year or more, your credit may be considered satisfactory.
Like most industries the mortgage business sometimes has its own language. Credit rating is no different. BC mortgage lending gets its name from people’s credit grading based on such things as payment history, amount of debt payments, bankruptcies, equity position, credit scores, etc.

Credit scoring employs statistics to assess the credit risk of a mortgage application. The score looks a\-t: past delinquencies, derogatory payment behavior, current debt levels, length of credit history, types of credit, and number of inquires.

The FICO score is the most common method used for credit scoring. This score was developed by Fair, Isaac & Company, Inc. for the three main credit Bureaus; Equifax (formerly Beacon), Experian (formerly TRW), and Empirica (formerly TransUnion).
FICO scores are repository scores. This means they ONLY consider the information contained in a person’s credit file. They DO NOT consider a persons income, savings or down payment amount.

Scoring is proprietary to each bureau and credit scores may vary from bureau to bureau. They all basically take into consideration a borrower’s experience with his or her past creditors. Generally, scores are factored thusly:

35% on payment history,
30% on the amount owed,
15% on how long you’ve had credit,
10% on new credit being sought, and
10% on the types of existing credit.

The scores can be used to direct applications to specific loan programs and to set levels of underwriting such as Streamline, Traditional or Second Review. The scores are not the final word regarding the type of program for which you will qualify or your interest rate.

Scoring has only been integrated into the mortgage process since 1999 and some people are skeptical about the accuracy of FICO scores. FICO scores, however, have been used for consumer lending since the late 1950’s by retail merchants, credit card companies, insurance companies, and banks. The data from large scoring projects, such as mortgage portfolios, demonstrate their predictive quality and that the scores do work.

Here are some ways to improve your credit score:

• Pay your bills on time.
• Keep Balances low on credit cards.
• Check your credit report information for accuracy.
• Be conservative in applying for credit and make sure your credit is only checked when necessary.

A borrower with a score of 720 and above is considered an A+ borrower. A loan with this score will be put through an "automated basic computerized underwriting" system and be completed within minutes. Borrowers in this category qualify for the lowest interest rates and their loan can close in a very short time.
A score below 680 but above 620 may indicate underwriters will take a closer look in determining potential risk. Supplemental documentation may be required before final approval. Borrowers with this credit score may still obtain "A" pricing, but the loan may take several days longer to close.

Borrowers with credit scores below 620 are normally locked into the best rate and terms offered. This loan type usually goes to "sub-prime" lenders. The loan terms and conditions are less attractive with these loan types and more time is needed to find the borrower the best rates.

All things being equal, when you have derogatory credit, all of the other aspects of the loan must be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision. Various combinations are allowed when determining your grade, but the worst-case scenario will push your grade to a lower credit grade.

Late mortgage payments and Bankruptcies/Foreclosures are the most important. Credit patterns, such as a high number of recent inquiries or more than a few outstanding loans, may signal a problem. Since an indication of a "willingness to pay" is important, several late payments in the same time period is better than random late payments.

Appraisal Basics
An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, he or she must consider the site and amenities as well as the physical condition of the property. The appraiser performs substantial research and data collection prior to arriving at a final opinion of value.
Three common market-driven approaches help the appraiser form an opinion or estimate of value.
The COST APPROACH derives what it would cost to replace the existing improvements as of the date of the appraisal, less any physical deterioration, functional obsolescence, and economic obsolescence.
The COMPARISON APPROACH uses other "bench mark" properties (comps or comparables) of similar size, quality and location that have recently sold to determine value.
The INCOME APPROACH is used in the appraisal of rental properties and has little use in the valuation of single-family dwellings. This approach provides an objective estimate of what a prudent investor would pay based on the net income the property produces.

Underwriting
Once the processor has put together a complete package with all verifications and documentation, the file is sent to the lender. The underwriter is responsible for determining whether the package is deemed an acceptable loan. If they need more information, the loan is put into "suspense" then contact the borrower to supply more information and/or documentation. If the loan is acceptable as submitted, the loan is put into an "approved" status.

Closing
Once the loan is approved, the file is transferred to the closing and funding department. The funding department notifies the broker and closing attorney (also known as Escrow) of the approval and verifies broker and closing fees. The closing attorney then schedules a time for the borrower to sign the loan documentation.
At the closing the borrower should:
• Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally not accepted and if they are they will delay the closing until the check clears your bank.
• Review the final loan documents. Make sure the interest rate and loan terms are what you agreed upon. Also, verify accuracy of the names and addresses on the loan documents.
• Sign the loan documents.
• Bring identification and proof of insurance.
After the documents are signed, the closing attorney returns the documents to the lender who examines them and, if everything is in order, arranges for the funding of the loan. Once the loan has funded, the closing attorney arranges for the mortgage note and deed of trust to be recorded at the county recorders office. Once the mortgage has been recorded, the closing attorney then prints the final settlement costs on the HUD-1 Settlement Form. Then they make the final disbursements.

Summation
A typical "A" mortgage transaction takes between 14-21 business days to complete. New automated underwriting has increased the speed of this process. Contact one of our experienced Loan Officers today to discuss your particular mortgage needs or Apply Online and a Loan Officer will promptly get back to you.