Navigating the Mortgage Process: Key Steps for a Smooth Closing
I was chatting with a realtor friend last week, and he mentioned that one of his buyers missed his closing date because he didn’t acknowledge the receipt of the Closing Disclosure (CD) in time. That got me thinking about how important it is to understand the mortgage process. Whether you’re a seasoned buyer, a first-time home buyer, or a parent helping your son or daughter with their first home purchase, I hope you will find this refresher helpful.
The mortgage process has changed significantly in the last few years. These changes which took effect on Oct. 3, 2015, brought about a series of changes to the forms provided to borrowers during the mortgage process and at closing that were meant to make the forms easier for borrowers to understand and come with certain timelines. Here’s a quick rundown:
Initiate Loan Application
Once you go under contract, we will provide you with an initial list of documentation needed to begin processing your loan. Quickly providing all requested documentation is essential to moving through the loan process without delays. We will also will discuss locking in your interest rate and encourage you to get a hazard insurance quote from an insurance agent to avoid last minute closing delays.
Disclosures
Once we have a complete application, we will prepare a packet of disclosures for you to sign. One of the key documents in this packet is the Loan Estimate (LE), which outlines the cost of your loan. You’ll receive the LE within three business days of your application.
It is very important to review this closely and discuss with me any questions you may have about the LE. The LE provides you with important information, including the estimated interest rate, monthly payment, lock period, and total closing costs for the loan.
Be sure to sign and return all disclosures within 24 hours of receipt to avoid delays.
Appraisal & Title
Once we have received your signed LE and intent to proceed, we will order your title work and appraisal. You will be receiving a link to pay for your appraisal. This cost is paid up front and listed as a credit to you on your Closing Disclosure.
The title search checks public records to confirm the property’s ownership and ensure it’s free of liens. The appraisal determines the market value of the property and checks for issues like water and termite damage. This usually takes about 7-10 days. We’ll send you and your realtor a copy of the appraisal as soon as we get it. As soon as we receive the appraisal, we will provide you with a copy.
Loan Processing
Next, your loan moves to a processor who reviews the file to ensure all the necessary documentation is included. You may be contacted to provide any outstanding or additional items. We will also be reaching out to your employer to verify your employment. Once all the requested information is gathered, the loan will be passed on to underwriting so that a final determination can be made.
Remember, it’s important to avoid activities that could affect your credit, like applying for new credit or quitting/changing jobs.
Underwriting
The underwriter will review the loan file and make the final decision on the loan approval. This can take from one day up to two weeks, depending on the type of transaction and market conditions.
Because each loan is unique, it is common practice for the underwriter to request additional documentation to support what was submitted in the original file. We will notify you and your realtor if additional items are needed, as well as when a final decision has been made.
Review Your Closing Disclosure
A critical component of the loan process is YOUR confirming receipt by signing the Closing Disclosure (CD) a minimum of 3 business days before closing. This document further reviews the cost of your loan. BankSouth Mortgage makes every effort to send you this document with ample time to review.
However, due to the often-expedited nature of the mortgage process, you may receive this document close to the third day prior to closing deadline. As soon as you are able to review this document, it is imperative you sign and return it as quickly as possible. Signing only confirms your receipt of the CD. This integral step requires close communication with your lender to ensure an on-time closing.
Closing!
Three days after you return your signed CD, you can close on your loan! Depending on the amount due, you might need to send a wire to the closing attorney. At the closing, you and the seller will sign the final loan documents. After signing, we’ll wire the loan amount to the closing agent, who will disburse the funds to all parties.
The deed transferring the title from the seller to you will be sent to the county for recording. You’ll receive the original deed once it’s recorded, along with your owner’s title insurance policy if you purchased one.
Now, move into your new home! Feel free to reach out with any questions or for more information!
The BankSouth Mortgage Advantage:
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer. Have peace of mind with our FREE one-time rate float-down and no lender fee refinance options!
Take advantage of our Buy Now, Refinance Later with a No Lender Fee Refinance** option for buyers who are purchasing currently at increased interest rates. Homebuyers who started their loan application with BankSouth Mortgage on or after June 15th, 2023, and close their loan with BankSouth Mortgage will be eligible for exclusive savings. Available on primary residence only and must be used within 60 months of the close date.
*Must refinance after 6 months from the 1st payment date and within 5 years of the close date. Available for new applications on or after 6/15/2023. Subject to credit and property approval. Additional conditions may apply. Terms are subject to change. “No Lender Fees” only apply to origination charges.
Blog post date: Monday, July 29, 2024
