The financial details required to obtain a mortgage can seem never ending. I will never forget the time I watched a loan officer placing U.S. saving bonds on the copy machine as proof of funds for a down payment. There is a detailed process that goes on behind the scenes that determine if you are considered financially capable and reliable enough to repay a large loan the size of a mortgage. So, how exactly is the money followed?
The Loan Officer is the first person you meet and starts the mortgage application process. They take the completed application and run a risk analysis using an automated underwriting system. The analysis collates your credit history, bank statements, tax documents, employment history and personal information into a computerized program. The value of the property and demographics of the area of the purchase are also parts of analyzing the risk.
After the initial assessment of your information, the application is passed on to the underwriter. It is there that the determination whether to fund your loan is made. It is quite common for the underwriter to agree to fund the loan but with a few conditions listed. The conditions are often only a flag that says that they would like more clarity on a piece of information. For example, if you had a large deposit to a bank account that was out of the ordinary, or job history dates seems a little out of whack, they may require clarifying information. Conditions are not necessarily barriers, just questions and pieces of information needed to determine approval. Back to the Loan Officer making copies of US Savings Bonds. The applicant was asked to prove that they had that much money in bonds, so they did!
Once the underwriter passes the file to the processor, the processor works on gathering the details needed to “clear the conditions.” More examples of conditions might be pay stubs without a W2, bank statements showing the available balance but not a complete 60 day history, an insurance quote but not a final policy, or an estimated value but not a complete appraisal showing the appraised value of a property. As the file is reviewed, the information may create additional conditions that will need to be addressed – anything that might be a potential risk for the company, should they agree to fund the loan. And so it goes, detail after detail, following the money.
After the processors have worked through a file, they send it back to the underwriter to review the conditions they’ve signed off or cleared. If the file looks good, the underwriter sends it to the pre-closing team to get ready for closing.
You are one of the fortunate people who have a Homeownership Program provided by your employer. One benefit is that you have a concierge service at your disposal to help you through this process. To begin the process of homeownership or mortgage refinancing, call 1-800-376-4603 or email us at firstname.lastname@example.org. This call can save you thousands in loan fees and is offered at no cost to you by your employer.