Following are the basic steps involved in obtaining a mortgage. It is important to remember to shop for rates. This doesn’t need to be an exhaustive process, ask your Realtor which lenders are fair, efficient and dependable and then check their rates and services. The lender you select will be judging you on the “Five C’s” of Lending: your Credit history, your Character, your available Capital, your Capability to repay and your Collateral (the market value, type and condition of the property you wish to buy). The process might seem a bit overwhelming, but it really isn’t, if you are prepared. Take the time to gather the necessary documents and information and everything will run very smoothly!

PRE-QUALIFICATION

Prequalification occurs before the loan process begins. Basically, you provide the lender with information concerning your income and debt and the lender will make a determination about how much you can afford. Bear in mind that lenders frown on large amounts of debt and monthly payments. It’s a good idea to keep your credit card balances as low as possible. It is helpful to understand how your current financial position affects what you can afford to borrow. Different loan programs may lead to different values, depending on whether you are qualified for them, so be sure to get a prequalification for each type of program you are suited for.

APPLICATION

The application is actually the beginning of the loan process. You (the buyer), now officially referred to as the “Borrower,” complete a mortgage application with the loan officer you have selected. You must now supply all of the required documentation for processing. Various fees and down payments are discussed at this time and you will receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) within three days of your application that will itemize the rates and associated costs for obtaining the loan.

OPENING YOUR FILE

This occurs between days 3 and 10 of the loan process. At this time the lender will order an appraisal as well as a survey of the property you wish to buy. The lender will also order credit reports and mail out requests for verifications, if necessary, for employment (VOE) and bank deposits (VOD) and any other documents needed to process your loan. The lender will review all of the information that you have supplied and then compile a list of the items not yet received. Try to get these items to the lender as soon as possible to speed along the process.

PROCESSING

Once the bank has compiled all of the necessary information it needs to process your loan, a “Processor” takes over. This typically occurs between 5 and 25 days after you have applied for the loan. The Processor will review your credit reports and verify your debts and payment histories as the VODs and VOEs are returned. If there are unacceptable late payments, collections for judgment, etc., you will need to submit a written explanation before the Processor can proceed. The Processor will also review the appraisal and survey and check for property issues that may require further discernment. The Processor’s job is to put together an entire package that the lender can then finance.

UNDERWRITING

Underwriting (what lenders call financing) occurs between days 15 and 25 of the loan process. The underwriter determines whether your loan package that has been processed is deemed as an acceptable loan, i.e., does the bank want to loan you that amount of money. If more information is needed, then the process is placed on hold and you will be contacted to supply more documentation.

If you, the Borrower, decide to make a down payment that is less than 20% of the price of the property you wish to buy, most lenders will require you to obtain Private Mortgage Insurance on your loan. After your loan is approved, the lender will, in turn, submit your loan package to a private mortgage guaranty insurer. The insurer provides extra insurance to the lender in case of default. As above, if more information is required by the insurer, then the process is placed on hold and you will be contacted to supply more documentation. Otherwise, it is usually returned to the mortgage company within 48 hours.

PRE-CLOSING

” Pre-Closing” occurs between days 20 and 30. During this time, your attorney will order a title search as well as title insurance. All approved contingencies, are met at this time and a closing date and time is scheduled for the loan.

CLOSING

The closing usually occurs between 30 and 45 days after the application. At the closing, the lender “funds” the loan with a cashier’s check, draft or wire to the selling party in exchange for the title to the property. This is the point at which you, the borrower, will finish the loan process and actually buy the house.

In the state of South Carolina, all real estate closings must be prepared by a licensed South Carolina attorney. Your attorney will be present to assist you when reviewing and signing your loan documents.