The Loan Process

What Happens During The Loan Process

The loan application process need not be intimidating. Don Peterson & Associates has detailed the steps involved in the process so that you feel confident about going to the lender prepared with everything you need to successfully complete the loan application.

During your initial meeting with a loan officer you will provide all the information necessary to complete the loan application. Your application is put in process and a credit report is ordered. The lender will pre-qualify you up to a certain dollar amount.  At this point, you can confidently make an offer on a home.

Once you have an accepted purchase contract, the lender will begin the process of verifying your documents. Letters requesting information verifying your employment, bank balances, rental or mortgage information, etc. are sent by the lender to the appropriate institutions. The information returned is compared with the application. As the process takes place you will be contacted to supply various necessary information. Please respond quickly to the lender’s requests so that your loan application can be approved.

Your appraisal is ordered and scheduled immediately; the interest rate will be locked to guarantee the rate agreed to. When the appraisal is received the entire file is sent to the underwriting department for final approval. This takes about 48-72 hours. When the loan is approved the documents are prepared for your purchase closing.

Mortgage Table

Type

Definition

Advantages

Drawbacks

30-Year-Fixed

A long term loan in which principal and interest are amortized over 30 years; both interest rate and amount of monthly payment remain unchanged for life of the loan

Considerable tax benefits, especially in early years, and payments never rise, regardless of inflation

Slow equity build up.

15-Year-Fixed

As above but payback in 15 yrs.

Usually lower interest rate than 30-year with faster equity build up and less interest paid out over the life of the loan.

Higher monthly payments. Less tax deductible interest.

ARM

Adjustable Rate Mortgage. A mortgage whose rate changes over time according to terms specified by the lender, usually according to short-term Treasury Bill rates.

Low initial interest rate, sometimes below market. Payments may decrease over time.

Payments may increase over time. Risky if rates rise significantly.

FHA-V/A

Government insured or guaranteed mortgages that can make purchase more affordable than conventional loans.

Little or no down payment required. Marginally better rate than conventional 30-year mortgages

Lower limits on the maximum that can be borrowed. VA requires current or past military service.