SIX STEPS TO A SUCCESSFUL CLOSING

Even though every person's situation is different, the steps to sucessfully obtaining a mortgage remain constant.

Step 1: Counseling

Our RFS Consultants and Affiliate TEAM will provide you with the tools and knowledge you need to make educated decisions to help you reach your financial goals. It is important to understand the impact your mortgage will have on your ability to create wealth before deciding which loan is right for you.

After submitting your Free Consultation application take the time to review the information in the Tools section with your RFS Consultant so that they can help you be prepared for a successful closing.

Our goal at REAL FINANCE SOLUTIONS is to create Raving Fans with each customer we serve. (If you have not read Raving Fans by Ken Blanchard & Sheldon Bowles you may want to check it out. It's a great read!)

Step 2: Application

Loan application should occur before you have found a property you want to buy or when you have determined that you wish to refinance the loan on your existing home. By submitting your application your credit report can be pulled and and a Pre-Approval Letter can be issued for Purchase loans. You will need this Pre-Approval Letter to submit with the offer on the home you wish to purchase so that the seller knows that you can obtain a loan and close on the home. The Pre-Approval Letter can usually be issued to you the same day you complete a mortgage application and supply required documentation for processing. After submitting your application you will receive a call from your RFS Consultant and one of our Affiliate TEAM Leader Loan Specialists. The Loan Specialist will review your goals for the loan and confirm the information on your application. Various fees and down payment options are discussed at this time so that you can confirm the loan that is best for you . The Loan Specialist will deliver a Loan Packet you that includes the loan application, a Good Faith Estimate (GFE), a Truth-In-Lending Disclosure (TIL) that itemize the rates and estimated costs for obtaining the loan and various other disclosures. These documents will need your signatures and will need to be returned before your loan can be processed. You will be asked if you prefer to receive the Loan Package electronically via Email or FAX or if you would prefer the package to be mailed.

Step 3: Processing of your Loan

The Loan Specialist will typically submit the application package to an Automated Underwriting System (AUS) that will provide them with the necessary documentation needed for loan approval. In some cases, the lender may also manually underwrite an application package.

Your Loan Specialist has a Processor on their team that reviews the credit reports and documentation to verify your employment, assets, debts, and payment histories. If there are unacceptable late payments, collections, judgments, etc., the processor requests a written explanation from you. The processor also orders the appraisal and will call you to obtain payment by credit card so that they can place the order. You should confirm with your Loan Specialist when you should expect to pay for the appraisal. The processor will review the appraisal and survey and check for property issues that may affect final loan approval. The processor's job is to put together an entire application package for the lender's underwriter.

Step 4: Underwriting

The lender's underwriter is responsible for determining whether the application package prepared by the processor meets all the lender's criteria using the 4 C's of underwriting. If more information is needed, the loan is put into "suspense" and the borrower will be contacted to supply more documentation.

The “4 C’s” for Underwriting a loan…

Credit History

How much you owe; if you pay bills on time; how often you borrow, do you live within your means; Will you repay the loan?

Capacity

Income vs. expenses; occupation, income, how long in same line of work; monthly debt obligations, number of dependents, do you pay child support or alimony; Can you repay the loan?

Capital

Is the money for down payment and closing cost coming out of your own funds or will you receive a gift from family members? How much money will you have left after closing?

Collateral

Is the value of the property sufficient to repay the loan in case of default? Will the lender be protected if you fail to repay the loan?

The “5th” C

The Four C’s help the lender determine the loan amount and monthly payment they will allow. There is a Fifth C that is sometimes overlooked that is just as important, the buyer’s comfort zone. The comfort zone is how much of their income they are comfortable paying toward their house payment. It does not matter if they qualify for more if they are not comfortable making that payment. One of the first questions to consider is, "Have you considered what your monthly Comfort Zone is? In other words, how much are your comfortable paying each month for your total monthly house payment including Principle, Interest, Taxes, Insurance and Home Owner's Association fees (if any)?"

If the underwriter approves the loan, the lender issues a conditional commitment to lend, orders title insurance, works with the borrower to clear all conditions to its commitment to lend, and then schedules a closing time. Conditions to the lender's commitment may include issues with credit, income, or the property that may arise during the processing and underwriting process.

Step 5: A Successful Closing

The closing will occur after all conditions are cleared and the lender issues a full loan approval. Some lenders refer to this as "Final Approval". At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the closing agent, who disburses funds, in exchange for the title transfer to the property. This is the point at which the loan process is finished and borrower's actually refinance or buy the house, subject to the lender's loan. Closings occur at different places in different states. For instance, some states require that the closing take place at a closing attorney's office, while others use a title or escrow company.

Step 6: Quality Service Survey

You will receive a Quality Service Survey (QSS) after your closing. Taking the time to send this back to us is greatly appreciated. We take your comments and suggestions seriously and use them to help us improve our services so that we can create Raving Fans.