1. Application

Application is actually the beginning of the formal loan process and usually occurs after you have found a property you want to buy or have determined that you wish to refinance the loan on your existing home. With the help of your ReaLoans loan officer, you complete a mortgage application for a particular loan program and supply all of the required documentation for processing. Your ReaLoans loan officer will discuss various fees, rate-lock and down payment options with you at this time, and the loan officer will deliver a Good Faith Estimate (GFE) and an initial Truth-In-Lending Disclosure (TIL) that will contain an estimated annual percentage rate (APR) within three days of the date of your application that itemize the rates and estimated costs for obtaining the loan.

The key form that you must complete is the loan application form itself (known as a 1003, from the Fannie Mae form number). The application identifies the property being financed, the borrowers, their employment information, their assets and liabilities, and other pertinent information that will support the decision on whether the borrower is financially able to maintain the payments. The property being financed is also being evaluated to see if it is adequate security for the loan. Clearly, it is vital that the loan application be complete and accurate.

Based on the information in the application, credit history (from the credit report) and other factors, your ReaLoans loan officer will evaluate all the available loan programs to determine the best product fit for you. It is important to be working with a professional originator who understands your needs but at the same time knows the loan program guidelines and underwriting requirements to find the right program.

2. Processing Your Loan

The processor will contact the employer and bank directly to verify your relationship with them. If the credit report indicates unacceptable late payments, collections or judgments or other credit history issues, then the processor will request a written explanation from you. If there are incorrect entries on your credit report, the loan processor will work with you to get them removed.

The processor will also order and review a title company commitment to issue a title policy on the property insuring your ownership and the lenders lien, a property survey in some cases, a tax certificate to be sure that the property taxes are current, and a flood certificate to ascertain whether the property is in a federal flood zone.

3. Underwriting Your Loan Application

Once ReaLoans has received all the information as per need through processing your loan application, the application is send for underwriting, which means that the comparison between credit and income information and the property to finance against the loan guidelines for the same. Generally, the elements like, stable income, manageable debts, and a credit history, as shown through credit report, indicating willingness and an ability to repay money lent to any person.

4. Decision

In general the loan applications are approved but in some cases however the same is rejected when the home application do not meet the guidelines. If that occurs, there are no full ranges of alternative loan products for which one may qualify, and may be glad to take another application for one of these products so that you can reach your home ownership goals.

5. Loan Closing

At closing one has to sign the documentation to take ownership of your home provided you are purchasing or transfer home loan provided you are refinancing, as well as get title insurance for your home. If your loan is an escrow loan, you will deposit an amount to fund your escrow account, which we will maintain to pay the property taxes and hazard insurance premiums on your home as they come due.

6. Loan Servicing

After closing a loan, a lender typically delivers the loan to an investor and arranges for the administration or servicing of the loan, either by the originating lender, or by the investor, or by a third party servicing company. Loan servicing includes receipt and tracking of monthly mortgage payments, related accounting to the investor and handling of customer inquiries. In addition, the loan servicer must ensure that all taxes and insurance premiums are disbursed from the escrow account to the proper taxing authorities and insurance carriers. The loan servicer must also complete and deliver to the borrower an annual escrow analysis to demonstrate that adequate funds are available to meet the projected tax assessments and insurance premiums. In the event of delinquencies, bankruptcies or foreclosures, the loan servicer represents the investor and handles all the legal notices, filings and other necessary actions to protect the investors interests. For all of these services, the loan servicer is compensated by receiving a small portion of the monthly payment from the borrower, usually between one-quarter to one-half of one percent.

The right lender that suits you

Excellent credit, easy access to financial documents, long-time employee of one company Internet lender, bank or mortgage bank.

Self-employed borrower, don't want to share data about income or assets with mortgage provider Mortgage broker.

Repeat home shopper, rate-and-term refinance customer, financially savvy Internet lender.

ARM shopper, "relationship" customer with many accounts at one institution Bank, thrift.

Convenience shopper wants easiest loan to get even if it costs more Home builder or real estate agency lender.

Mortgage types

A FIXED RATE; where the interest rate remains constant for a set period; typically for 2, 3, 4, 5 or 10 years.

A DISCOUNT RATE; where there is set margin reduction in the standard variable rate (example: a 2% discount) for a set period; typically 1 to 5 years.

A CASHBACK mortgage where a lump sum is provided as a percentage of the advance e.g. 5% of the loan.

A CAPPED RATE; where similar to a fixed rate, the interest rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years.