THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: SATURDAY, June 18, 1994 TAG: 9406160370
SECTION: REAL ESTATE WEEKLY PAGE: 25 EDITION: FINAL
SOURCE: David Gilbert and Helen E. Dragas
DATELINE: 940618 LENGTH: Medium
A. Several phases make up the life of a loan. The more participants involved in the process, the more likely that complications will arise. Here are the phases:
{REST} Application and interview: To submit an application, a home buyer meets with a loan officer. The officer will explain all available loan programs, including possible terms, interest rate options and low-documentation conventional loans.
The applicant will choose a mortgage program, an expected closing date and the closing agent, such as a title company. Also, applicants will indicate whether they want a guaranteed rate, a float option or no rate protection before the loan is approved.
Finally, would-be borrowers will complete an application, supplying the sales contract and supporting documents such as pay stubs or bank statements. They will also agree to the required fees for a home appraisal and a credit report.
Processing: Once the home buyer submits an application, the loan officer will organize the file, and a processor will be assigned to it. Also, the applicant will receive state and federal disclosure regulations to review.
The processor will order these documents:
An appraisal from a licensed appraiser.
A credit report from a credit bureau.
Verfication of employment and other income sources.
Verification of the down payment from a bank or credit union.
The processor will review these documents and may request additional data if needed. Applicants must provide the material promptly and make sure that the information is accurate.
Underwriting and approval: After processing, the application goes to the lender's underwriting department. It will also go to a private mortgage insurance company if the loan is a conventional one with a loan-to-value ratio of more than 80 percent.
After reviewing the information, the underwriter will approve or deny the loan. That decision will then go to the applicant, loan officer and real estate agents involved.
Borrowers should check the conditions of an approval - such as rate options and terms - and confirm the closing date with the appropriate agent. To prepare for closing, borrowers will also need to obtain homeowner's insurance and other applicable policies.
Confirmation: The lender will confirm the loan's final rate, closing conditions and closing costs with the borrower. Also, the closing agent will receive the closing and payment documents.
The closing agent will tell the borrower the exact dollar amount to bring to closing. The money should be in the form of a certified or cashier's check.
Closing: The closing agent will coordinate the date, time and place of closing with all parties. Also, the borrower will receive legal documents and disclosures to review.
At closing, the borrower will sign the appropriate documents and pay the required fees.
Loan servicing: After closing, the lender or servicing agent will mail the borrower a coupon book and pyament envelopes. The borrower will also receive account and payment information.
The lender will manage the tax and insurance-escrow accounts and administer any insurance claims. The servicer will collect the payments and pay the taxes and insurance from the escrow account, if applicable.
The mortgage process requires the hard work and cooperation of the applicant and about a dozen other participants. These can include real estate agents, lender representatives, appraisers, surveyors, termite inspectors and closing agents.
All are key players in an intricate process that helps make home-ownership a reality.
by CNB