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Mortgage Loan Process

By providing an overview of the loan process, we can make the homebuying process more transparent and easier to understand. This can help you make informed decisions and feel more confident throughout the process.

 

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Step 1: Pre-Qualification

Pre-qualification starts the loan process. Once a lender has gathered information about a borrower's income and debts, a determination can be made as to how much the borrower can pay for a house. Since different loan programs can cause different valuations a borrower should get pre-qualified for each loan type the borrower may qualify for.

In attempting to approve homebuyers for the type and amount of mortgage they want, mortgage companies look at two key factors. First, the borrower's ability to repay the loan and, second, the borrower's willingness to repay the loan.

Ability to repay the mortgage is verified by your current employment and total income. Generally speaking, mortgage companies prefer for you to have been employed at the same place for at least two years, or at least be in the same line of work for a few years.

The borrower's willingness to repay is determined by examining how the property will be used. For instance, will you be living there or just renting it out? Willingness is also closely related to how you have fulfilled previous financial commitments, thus the emphasis on the Credit Report and/or your rental payment history.

It is important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, your stronger point could make up for the weak one. Mortgage companies could not stay in business if they did not generate loan business, so it is in everyone's best interest to see that you qualify.

 


Step 2: Mortgage Programs and Rates

To properly analyze a mortgage program, the borrower needs to think about how long he plans to keep the loan. If you plan to sell the house in a few years, an adjustable or balloon loan may make more sense. If you plan to keep the house for a longer period, a fixed loan may be more suitable.

With so many programs from which to choose, each with different rates, points, and fees, shopping for a loan can be time-consuming and frustrating. An experienced mortgage professional can evaluate a borrower's situation and recommend the most suitable mortgage program, thus allowing the borrower to make an informed decision.

 


Step 3: Loan Application

The application is the true start of the loan process and usually occurs between days one and five of the start of the loan process. With the aid of a mortgage professional, the borrower completes the application and provides all Required Documentation.

The various fees and closing cost estimates will have been discussed while examining the many mortgage programs and these costs will be verified by the Loan Estimate (LE) which the borrower will receive within three days of the submission of the application to the lender.

 


Step 4: Processing

Once the application has been submitted, the processing of the mortgage begins. The Processor orders the Credit Report, Appraisal, and Title Report. The information on the application, such as bank deposits and payment histories, are then verified. Any credit derogatories, such as late payments, collections and/or judgments require a written explanation. The processor examines the Appraisal and Title Report checking for property issues that may require further investigation. The entire mortgage package is then put together for submission to the lender.

 


Step 5: Required Documents

If you are purchasing or refinancing your home, and you are salaried, you will need to provide the past two-years W-2s and one month of paystubs: OR, if you are self-employed you will need to provide the past two years tax returns. If you own rental property you will need to provide Rental Agreements and the past two years' tax returns. If you wish to speed up the approval process, you should also provide the past three months' bank, stock, and mutual fund account statements. Provide the most recent copies of any stock brokerage or IRA/401k accounts that you might have.

If you are requesting cash-out, you will need a "Use of Proceeds" letter of explanation. Provide a copy of the divorce decree if applicable. If you are not a US citizen, provide a copy of your green card (front and back), or if you are NOT a permanent resident provide your H-1 or L-1 visa.

If you are applying for a Home Equity Loan you will need, in addition to the above documents, to provide a copy of your first mortgage note and deed of trust. These items will normally be found in your mortgage closing documents.

 


Step 6: Credit Reports

Most people applying for a home mortgage need not worry about the effects of their credit history during the mortgage process. However, you can be better prepared if you get a copy of your Credit Report before you apply for your mortgage. That way, you can take steps to correct any negatives before making your application.

A Credit Profile refers to a consumer credit file, which is made up of various consumer credit reporting agencies. It is a picture of how you paid back the companies you have borrowed money from, or how you have met other financial obligations. There are five categories of information on a credit profile:

NOT included on your credit profile is race, religion, health, driving record, criminal record, political preference, or income.

If you have had credit problems, be prepared to discuss them honestly with a mortgage professional who will assist you in writing your "Letter of Explanation." Knowledgeable mortgage professionals know there can be legitimate reasons for credit problems, such as unemployment, illness, or other financial difficulties. If you had problems that have been corrected (reestablishment of credit), and your payments have been on time for a year or more, your credit may be considered satisfactory.

The mortgage industry tends to create its own language, and credit rating is no different. BC mortgage lending gets its name from the grading of one's credit based on such things as payment history, amount of debt payments, bankruptcies, equity position, credit scores, etc. Credit scoring is a statistical method of assessing the credit risk of a mortgage application. The score looks at the following items: past delinquencies, derogatory payment behavior, current debt levels, length of credit history, types of credit and number of inquiries.

By now, most people have heard of credit scoring. The most common score (now the most common terminology for credit scoring) is called the FICO score. This score was developed by Fair, Isaac & Company, Inc. for the three main credit Bureaus; Equifax (Beacon), Experian (formerly TRW), and Empirica (TransUnion).

FICO scores are simply repository scores meaning they ONLY consider the information contained in a person's credit file. They DO NOT consider a person's income, savings or down payment amount. Credit scores are based on five factors: 35% of the score is based on payment history, 30% on the amount owed, 15% on how long you have had credit, 10% percent on new credit being sought, and 10% on the types of credit you have. The scores are useful in directing applications to specific loan programs and to set levels of underwriting such as Streamline, Traditional or Second Review. However, they are not the final word regarding the type of program you will qualify for or your interest rate.

Many people in the mortgage business are skeptical about the accuracy of FICO scores. Scoring has only been an integral part of the mortgage process for the past few years (since 1999); however, the FICO scores have been used since the late 1950's by retail merchants, credit card companies, insurance companies, and banks for consumer lending. The data from large scoring projects, such as large mortgage portfolios, demonstrate their predictive quality and that the scores do work.

The following items are some of the ways that you can improve your credit score:

A borrower with a score of 680 and above is considered an A+ borrower. A loan with this score will be put through an "automated basic computerized underwriting" system and be completed within minutes. Borrowers in this category qualify for the lowest interest rates and their loan can close in a couple of days.

A score below 680 but above 620 may indicate underwriters will take a closer look in determining potential risk. Supplemental documentation may be required before final approval. Borrowers with this credit score may still obtain "A" pricing, but the loan may take several days longer to close.

Borrowers with credit scores below 620 are not normally locked into the best rate and terms offered. This loan type usually goes to "sub-prime" lenders. The loan terms and conditions are less attractive with these loan types and more time is needed to find the borrower the best rates.

All things being equal, when you have derogatory credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision. Various combinations are allowed when determining your grade, but the worst-case scenario will push your grade to a lower credit grade. Late mortgage payments and Bankruptcies/Foreclosures are the most important. Credit patterns, such as a high number of recent inquiries or more than a few outstanding loans, may signal a problem. Since an indication of a "willingness to pay" is important, several late payments in the same time period are better than random lates.

 


Step 7: Appraisal 

An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.

Using three common approaches, which are all derived from the market, derives the opinion, or estimate of value. The first approach to value is the COST APPROACH. This method derives what it would cost to replace the existing improvements as of the date of the appraisal, less any physical deterioration, functional obsolescence, and economic obsolescence. The second method is the COMPARISON APPROACH, which uses other "benchmark" properties (comps) of similar size, quality, and location that have recently sold to determine value. The INCOME APPROACH is used in the appraisal of rental properties and has little use in the valuation of single-family dwellings. This approach provides an objective estimate of what a prudent investor would pay based on the net income the property produces.

 


Step 8: Underwriting

Once the processor has put together a complete package with all verifications and documentation, the file is sent to the lender. The underwriter is responsible for determining whether the package is deemed an acceptable loan. If more information is needed, the loan is put into "suspense" and the borrower is contacted to supply more information and/or documentation. If the loan is acceptable as submitted, the loan is put into an "approved" status.

 


Step 9: Closing

Once the loan is approved, the file is transferred to the closing and funding department. The funding department notifies the broker and closing attorney of the approval and verifies broker and closing fees. The funding department issues the Closing Disclosure (CD) within three business days prior to consummation then schedules a time for the borrower to sign the loan documentation.

At the closing the borrower should:

After the documents are signed, the closing attorney returns the documents to the lender who examines them and, if everything is in order, arranges for the funding of the loan. Once the loan has funded, the closing attorney arranges for the mortgage note and deed of trust to be recorded at the county recorders office. Once the mortgage has been recorded, the closing attorney then prints the final settlement costs on the final CD. Final disbursements are then made.

 

 

 

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Your Experience is Our Priority


Your local lending partner, our team strives to exceed your expectations before, during and after the mortgage process.

Gee came recommended from my real estate agent and I'm glad I reached out. Tidewater was able to provide a loan that was far and away the best available, nearly a full point lower than the best rate from one of the major national lenders at the time. Gee and her team were knowledgeable and professional every step of the way. I was also impressed at how prompt they were in communication. This made navigating a few interesting situations that arose during my purchase much easier.
If I find myself in the market for another loan in the area, I will absolutely be reaching out to Gee again.

Matt

Working with Michelle Phillips was easy because she has great communication and knowledgeable on everything. All around 5 stars

Ilia Walker-Randall

I had an exceptional experience from the meet and greet to closing.

Catherine

Jennifer was friendly and informative throughout our Mortgage process. She is the BEST!

Allen B

Let Jennifer handle everything.

Scott P

Everything went well. My husband and I’s experience was fantastic. Jennifer was super helpful and explained everything to us that we didn’t understand. She made the process so easy and quick. I never felt confused or didn’t understand anything. Jennifer was always quick to explain
everything and break it down for us. I don’t think we could have made it through the process of buying our home without her!

James and Tracy

Everything was great.

Dalton and Eleanor

It was perfect.

Kristin

The team I was working with were amazing and so Knowledgeable. If they didn’t know the answer they were quick to find it. I would
definitely recommend Jennifer to anyone that is looking to purchase a home especially first time homebuyers because I didn’t know
what I was doing and she got me through every step of the way. Thank you so much for being there.

Cassi

Thank you very much for a smooth and seamless transition. It was great working with you and your staff. Thanks for outstanding
customer service.

John

Michelle Phillips was very hands on from the beginning to the end. This was our second house we bought with her assistance and both times they were stress free. Whenever I had a question and reached out to her she was quick to respond. The whole office is full of hard friendly workers. In my opinion they’re the best.

Mark Skyles

I was able to ask all of my questions and if I was to forget an answer my loan officer was more than willing to answer them again. I
never had to worry about if something was wrong, and directions were clear through the whole process. I had a wonderful experience overall.

R. Lewis

We are so happy we chose Farmers Bank Home Mortgage to do our refinance. We were very fortunate that we had the opportunity to
work with Jennifer Simpson, who is an amazing loan officer. She went above and beyond every step of the way right up to closing
day. Thank you!

Davis;

Jennifer was the absolute BEST when it came to ALL parts of the mortgage process. As a young, first time home buyer, I had a lot of
questions and uncertainties. Every question I had, she was able to answer. We had a few obstacles to overcome, but Jennifer was
quick to react and never let me stress over it. I have and will continue to refer my friends and family to Jennifer for any future needs.
She is THE BEST!!!

Cole

My experience was great! Jennifer was very professional and very helpful from start to finish.

Amanda

I refinanced my house with Jen then I got qualified to buy my dream beach house and I bought it and couldn’t be any happier with Jen
she was awesome and I will definitely recommend her all day everyday

H. M.

Very satisfied. Jennifer was on point, fast and worked hard to give me the best loan.

Ashley

Everything was great. We loved working with Jennifer. Jennifer was the absolute sweetest. She was always there to answer any questions and never felt like we were bugging her. She made sure we fully understood everything.

Mike and Brooke

Excellent experience honestly. From my first interaction with Jennifer I was treated with respect and was given any information I requested. I was running late on a few documents and Jennifer didn't once get negative or lose her patience. I appreciate the amount of time and respect Farmers and Jennifer gives to it's customers.

S. Sellers

Jennifer made everything nice and smooth. Looking forward to doing more business with Jennifer and send her all the business I can.

H.M.

Jennifer Simpson was excellent! I have already started referring friends. She was great to work with. She was very knowledgeable and guided me through the entire
process. I would highly recommend Farmers Bank!

T, Smith

Jennifer was amazing! She truly made us feel like we were her main priority and our success was her utmost priority. Loved working with her

C and J

Working with Jennifer Simpson thru Farmers Bank has been a great experience. She was always available and was there to answer my 1,000 questions I had. She was very eager to be sure we closed even with all the limitations due to the virus. I would definitely recommend her and Farmers Bank Home Mortgage to anyone. Can not thank her enough!

White

Paul Branch and Farmers Bank took great care of me and quickly found a loan and great rate to meet my needs. They were very personable and easy to work with. Best home loan experience I've ever had!

Lauren S

I highly recommend Farmers Bank Home Mortgage. Jennifer Simpson made my home refinance process as simple as possible from start to finish. She kept me updated every step of the way. Thank you, Jennifer for an excellent experience.

Lisa S

After shopping around for a mortgage lender, I decided to go with Farmers Bank Home Mortgage because of Jennifer's exceptional customer service. I truly felt like I was working with a friend that had my best interests in mind

Daniel T

Jennifer made me feel like she cared about helping. I had gone with another company at first. They were promising low rates and no fees. At the nd of their process all the promises disappeared and the fees were triple what Farmers Bank Home Mortgage was.

William E

She goes above and beyond for all of her clients! The best there is!!

Shea J

Paul was absolutely great to work with. He was extremely Clear, thorough and patient as he guided us through the process. He was also very timely and worked hard to make sure everything was ready to go before closing. Thank You so much.

Babb

She is a very hard working young lady!! I can't think of anyone else I would choose to handle my next mortgage loan!!! She has been in the mortgage business for many years and has attained a vast knowledge which will benefit anyone needing her assistance!

Gale B

Deb Olmstead at Tidewater Home Funding is prompt, professional, and personable. She went out of her way to make sure everything was as
smooth as silk.

Anonymous

Closing went awesome and smooth as can be.. Thank you so much for the basket of goodies.. Between you guys and Martha we were spoiled.. Just got water n power on and believe it or not half of the house is packed and moved to the new house already..  We were very blessed to have had you as our loan officer and doesn't hurt that you have an awesome staff like Linda  and all..  Thank you thank you so much again Paul for being so patient and considerate you have made our dreams of being home owners true.
 

Mrs. W

Good experience. Enjoyed working with Paul.

J. Foshee

We first applied for a loan at our financial institution. The experience with them was horrible, we felt like we were nobody to them. So down the road we went. Found Paul Branch as a recommendation from a friend. Our lives changed. Paul sat down and explained everything to us like he was a very good friend. Huh? We were not used to this considering what we just had experienced. When we had a question and left a message he promptly called us back. To our surprise Paul helped us get the very best interest rate, better than our bank!! If I know anyone looking for a loan I know who to send them to. HAD TO DO IT!

Barbara H.

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Reach out to our team of local mortgage specialists and take the initial step towards homeownership. Our team is ready to assist you throughout the process, offering you the necessary information and guidance to help you make informed decisions for your unique needs. Don't delay any longer - apply today to begin.

 

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