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Let’s say that you have (1) contracted to purchase a home; (2) completed the loan application; and (3) provided all required documents to your loan officer.

What happens now, you ask?

Your loan will be submitted for underwriting. In short, underwriting is the lender’s review of all the information submitted compared to FannieMae and/or FreddieMac lending guidelines to determine if it within their risk ratios. (More on underwriting will be featured later.) Once the underwriting process has been completed, your loan officer should tell you the results. Here’s what you should look for in your loan officer’s remarks:

1. Make sure that your loan officer reviews your underwriting results with you in terms that you understand. If something confuses you, ask for further explanation.

2. The loan officer should tell you if the results of the underwriting will affect the terms that you outlined in the Good Faith Estimate (GFE), such as your interest rate.

3. Expect updates: if you are working with a conscientious loan officer, you will be kept abreast of your loan’s progress. The underwriting process can take 24-48 hours or several days to weeks, depending on the volume of loans the lender is processing at any given time.

4. Your loan officer should tell you immediately if the underwriter has asked for additional documentation even if it is something that seems out-of-the-ordinary or trivial. If necessary, your loan officer should guide you through providing the underwriter with whatever information s/he requests as quickly as possible.

No matter what type of loan you need or how much you need to borrow, your loan officer’s job is to make the process clear and easy for you. Your questions and concerns should be addressed and any issues that arise addressed immediately. By working with you, your realtor and closing agent, your loan officer should make the entire loan process seamless and stress-free.

For further information or definitions of terms, see our website: www.PremierMortgageSource.com

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Whether purchasing or refinancing, once your loan is approved, your loan officer should confirm your loan commitment from the lender and provide you with a closing date. If you are purchasing, the date set is the day the loan transaction will occur.

If you are refinancing, the closing date is the day you will sign all the new loan documents and your new loan will actually fund and record three days from the date you sign the documents. This means that if you are doing a cash-out refinance, you will not be given a check for the money you are cashing-out until the 3 days have passed and your new loan has been recorded. At any point during the 3 day period, if you choose, you can change your mind about the loan and withdraw without penalty.

No matter what type of loan you need or how much you need to borrow, your loan officer’s job is to make the process clear and easy for you. Your questions and concerns should be addressed and any issues that arise addressed immediately. By working with you, your realtor and closing agent, your loan officer should make the entire loan process seamless and stress-free.

For further information or definitions of terms, see our website www.PremierMortgageSource.com.

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Third, your loan officer should tell you what type of loan programs you qualify for and explain their differences so that you can make a proactive decision about the type of loan you want.

Do you want a fixed rate loan? Do you want a “no down payment” loan? Will you have to pay PMI (private mortgage insurance)? Can you use gift money? Is there a prepayment penalty? In providing this information, your loan officer should explain the meaning of each aspect of the loan as well as outlining the pros and cons of each program.

Once you have contracted to purchase a home, completed the loan application and provided all required documents to your loan officer, your loan will be submitted for underwriting. Once the underwriting process has been completed, your loan officer should tell you the results.

Make sure that your loan officer reviews your underwriting results and lets you know if it impacts the terms that you had outlined on your Good Faith Estimate. You should know once underwriting has been completed if you will have any adjustments to the terms outlined on your GFE. If there are, it may affect your interest rate or other terms of your loan.

It is your loan officer’s job to review your credit, income, debt and loan options well enough that your underwriting should not present any unexpected results. However, if something should arise, your loan officer should bring it to your attention immediately. If working with a conscientious loan officer, you will be kept abreast of your loan’s progress.

Even under the best of circumstances, underwriters can set unexpected conditions which could impact your loan differently than the loan officer initially outlined. Your loan officer should notify you immediately of any conditions set by the underwriter that are unexpected. Remember, the underwriter’s job is to find a reason to deny the loan. Don’t be alarmed if your loan officer tells you that the underwriter has asked for something that seems out-of-the-ordinary or trivial. The best thing to do, whenever possible, is to provide the underwriter with whatever information they request as quickly as possible.

Again, a good loan officer will guide you through this aspect of the loan process easily.

When applying for a mortgage to buy a house, whether it’s your first or fifth, there is certain information your loan officer should tell you. It doesn’t matter whether you are applying for your mortgage with your local bank or with a mortgage broker, the information you want is the same.

First, your loan officer will have to pull a credit report to accurately qualify you for a mortgage. If you are qualified without having your credit pulled by the loan officer, then your qualification is not necessarily going to mean that you would actually qualify for a loan. In such a situation, the qualification would only mean that your debt to income ratio falls within the lender’s guidelines.

Assuming that the loan officer has pulled a credit report, they should tell you what your credit scores are. Credit scores over 620 are considered acceptable and/or average credit. Credit scores over 720 imply that you have an excellent credit history. Your credit report will also indicate if you have had any late payments, have any accounts in collections or have any judgment outstanding. (For further information on correcting credit reports and addressing credit issues, see our website, www.premiermortgagesource.com)

A complete pre-qualification for a mortgage loan will include a review of your gross monthly income, your monthly debt (total of minimum payments on all accounts, not including rent or current mortgage payment or utilities), and your credit scores. Once completed, your loan officer should provide you with a pre-qualification letter for your real estate agent or for the seller of the home you wish to purchase. Pre-qualification should not be confused with pre-approval. To be pre-approved for a loan, your loan officer must submit a completed loan application and a credit report to a lender for underwriting. The underwriting will either be denied or approved pending certain conditions being met.

Loan commitment is given by the lender only after all conditions are met and the loan is ready to schedule for closing. It is very important to understand these distinctions as both realtors and many loan officers will often use the terms interchangeably despite their specific differences.

Tomorrow we’ll cover the 2nd thing your loan officer should be telling you.