Understanding the process

The mortgage process is filled with precise and inflexible procedures that can create confusion and resistance from the borrower. Let’s take a look at this mortgage approval process and organize how we can speed it up and eliminate the frustration.

Step 1. You will receive an email that ask you to confirm that you want to proceed with the financing process. No problem. Just say yes.

Step 2. You will receive the first LE (loan estimate). You will acknowledge receipt of this document, which estimates closing costs, interest rate, and payments. The amounts shown may be inaccurate, but you are only acknowledging receipt of the document.

Step 3. You will receive about 20 pages of State of New Mexico disclosures. They can also be acknowledged electronically. If you wish, you can go to themortgage company and they will help you with the signatures in person.

Step 4. You will be given a list of documents that the underwriter will need in order to approve your loan. Do this immediately, even if the list has items that seem unnecessary. Do it fast.

Step 5. After the underwriter approves the loan, your mortgage company will order the appraisal and will need your funds to pay for the appraisal.

Step 6. When the appraisal and other documents are reviewed, you will get a copy of the appraisal and a list of items that the underwriter may need.

Step 7. Your mortgage broker will lock your loan and you will receive a new LE that shows the locked interest rate.

Step 8. The final loan approval will be secured and the title company and underwriter will balance the closing costs to arrive at the final amounts. These final and accurate amounts will appear on a CD (closing disclosure) that will be finalized between the title company and the investor’s closing department.

All of this can be accomplished within 2-3 weeks when the borrower and the broker work together to produce the necessary documentation. Cooperation and trust are necessary to conclude the loan process quickly. Be sure you have a knowledgeable loan officer. The process is designed to protect the validity of loan approvals and therefore to protect the continuation of the financial options for millions of families. Don’t fight the paperwork, and be glad that these low-interest-rate options are available.

Jim Gay was a real-estate broker for 20 years and has been a financial consultant to Fortune 500 companies. He is currently a broker/owner of the Mortgage Place, Inc. (505-986-9080) and can be reached at jim@jimgayhomemortgage.com.