The Lender’s Approval Process
Underwriting
If your lender doesn’t underwrite your loan as part of your pre-approval process, this will take place upon your purchase offer being accepted and a contract being signed and executed.
Income & Assets
The lender will document your income, assets, and credit. The lender might document other third party items such as verifying your employment. They will make sure the borrower’s income is sufficient to cover the monthly obligations, including the housing payment, including mortgage payment, private mortgage insurance, taxes, homeowner’s insurance, HOA dues).
Appraisal
The lender will order an appraisal from an independent, licensed appraiser. This report will verify the value of the property based on recently closed similar properties near your property.
Title Commitment & Title Insurance
The title company will provide a written commitment to issue title insurance. This will confirm the current title holder and protects the lender against issues such as recording errors, unknown liens, and errors in legal descriptions.
Homeowner’s Insurance
Buyer will obtain homeowner’s insurance from the carrier of their choice. This policy will take effect no later than the closing date. Lenders generally require the policy to cover at least the insurable replacement cost.
It’s Time to close and fund
The Signing
After the lender has completed underwriting of your loan and is ready to close and fund your loan, your lender will issue a final or clear to close approval. Your real estate agent and, if part of the process, your attorney, will schedule your closing with the title company as the signing will typically take place at a title company in front of a notary or an escrow officer. Your lender will create a package of documents, including the Mortgage and the Note, for you to sign at closing. Ask your mortgage broker if there is anything you need to do to prepare for this, such as bringing a photo ID or perhaps a cashier’s check if you are purchasing real estate.
Your Funds
The Good Funds Rule is a statelevelstate level regulation that requires settlement agents (like title companies or closing attorneys) to receive verified, cleared funds before they can complete a real estate closing and disburse money. You will need to wire your funds to the title company or, subject to certain limits, you may be able to bring a bank cashier’s check. Contact the title company the week before the closing to obtain and verify their wire instructions. You will provide these wire instructions when ordering your wire. And contact your bank to confirm their process and procedures when ordering your wire.
Congratulations
By the end of the closing your lender will review the signed documents and confirm that the title company has authorization to disburse the lender’s funds. Congratulations! You now own your new home.
