Full Application
If You Are Already Preapproved:
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Call with the Address: It’s easy to complete the full application if you are already preapproved with that lender; all you need to do is provide the address of the property you want to purchase and keep an eye on the process as the inspectors, appraisers, insurance agents, title and escrow officers do their work.
Your loan officer or processor (or mortgage broker) will keep you updated as the necessary pieces come in and are processed.
- Lock a Rate: As soon as you have the property (and sometimes before, depending on the lender and the loan type), you can lock in the interest rate. This means you have a written agreement guaranteeing a specific interest rate for a period of time (usually 60-90 days). As long as the sale closes within that timeframe, you will get this rate.
This is important when interest rates are going up and you want to get the lowest rate possible (lower rates mean lower monthly payments).
- Check In: If you don’t hear from your loan team, it’s good to call every few days and check in about each required document: you don’t want to be surprised by a panicked phone call the morning of closing saying that the appraisal still hasn’t come in and therefore you can’t close the sale today.
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Timeline: In a complex transaction, or in a busy month, it can take up to 45 days to close a loan. Being preapproved usually cuts days and sometimes weeks from that schedule, some lenders will promise to handle it in 15 days if you are preapproved.
- Scheduling the Closing/Settlement Date: Either way, you can reduce your stress level by allowing a few extra days to make sure everything gets done correctly. Buying a home is a very emotional transaction and a lot of money is involved, try to give yourself and everyone else a little breathing room so you stay sane throughout the process.
If You Are Not Preapproved:
If you are starting from scratch with a lender or broker and your purchase offer has been accepted, you need to work quickly to get the loan in place.
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How It Works:
- Decide on a Loan Type: You’ll need to select a loan to apply for. See Loan Types for more information about what’s possible, and talk with your loan officer or mortgage broker about what they recommend for you.
- All Your Data: You give the lender or broker your personal and financial information and the loan team processes the application (pulling your credit history, verifying your income and debts, etc.). See Required Documentation for a list of what you’ll need.
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Property Data: The lender also needs the information on the property so they can make sure it is appropriate collateral for the loan.
This means they will want an appraisal, inspection, homeowners’ insurance and proof of clear title. Either you or your agent will be responsible for arranging these, and for opening up an escrow account for the funds of the sale.
- Timeline: When you are setting a closing/settlement date, you need to consider that it can take as long as 45 days to close a loan from start to finish. Some lenders and some loan types can be processed more quickly, talk to your loan officer or broker if you or your seller need a quicker close.
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Check In Often: You and your agent will need to watch over this process carefully and make sure everything gets done quickly and well. There are a lot of pieces to be gathered and problems can crop up in any one of them; which will lead to your loan not going through in time.
This can be critical if you are purchasing in an area with a lot of home sales or during a period when many people are refinancing their home loans: you don’t want your purchase to fall through because the lender couldn’t process and fund your loan by the closing/settlement date
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Loan Processing Time: Be aware that the mortgage and real estate businesses are very seasonal, and if you hit a busy time, your loan and various reports may be delayed.
- Early December and January can be good times to buy a home; most people don’t house hunt over the holidays so there are fewer applications to be processed, appraisals/inspections/etc. to be done, and your real estate team won’t be overwhelmed. (Just try to avoid the Christmas holiday vacation period.)
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July and August are always busy:
- School starts in September and families want to be settled in their new homes beforehand
- Vacations: like everyone else, loan team members take summer vacations so the staff may be short-handed
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