Bad Credit Mortgage Process.

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I Just Bought a Home, Woah that was a Lot of WORK  
The Process of Closing a Loan to Buy or Refinance Your Home

There may be more to buying a new home than you think. So much work goes into the mortgage on a home on all ends, even yours. This article explains the process so you know what to expect.

Closing on the purchase of a new home is a two step procedure. You have the real estate details and you have the mortgage details.

When you apply for a loan, there is an entire step by step process to get it closed for you. It usually takes a lender 30-45 days to close a loan, so make sure your real estate contract gives you ample time to get it done.

Also take into consideration that it may take a broker some extra time to find the best product for a bad credit borrower.

This being said, there are things you can do to speed the process and get into your new home faster.

The number one way to get into your home on time, is to start the loan process before looking for a home. This way, you know what price range you’re looking for and most of the paperwork is complete before you start. Getting preapproved is step number 1.

There’s A LOT going on behind the scenes at the mortgage office, and they're working HARD to close your loan and get you in the home. If you could be a fly on the wall this is what you would see:

1) Phone interview to discuss your mortgage needs.

The mortgage broker is assessing your situation in order to see what types of loans he has so he can find you the best one. Its IMPORTANT to tell the truth, and tell your broker ALL of your information. Even if it’s negative, there are often ways to get around it. He/she needs to know everything upfront to give you the best service possible.

2) You provide a full Application and approve a credit inquiry.

When a full application is taken, a loan expert examines all of your information, job history, income, debt, and credit, to see how much you qualify for and what loan program is best for you.

Now the Real Work Begins:

3) Program and Rate Quote

The broker now searches through hundreds of loan types for the right program for you, and according to your details finds your rate.

4) Documentation.

Here’s where you can REALLY help the process. Your broker needs to collect A LOT of documentation from you. It can kind of be overwhelming. They’ll be looking for income documentation, tax returns, bank statements, W2 information, and possibly more. Ask for a checklist and fax your information as soon as possible to the broker can review all of this information. Make sure to send ALL pages even if the information isnt relevant. You will also asked to be signed mortgage disclosures (paperwork provided by the broker). Sign and return as fast as you can.

5) Appraisal, title work, real estate contract, and insurance (among other things) are ordered. You can also help by checking up on these services to give them a little nudge.

Now Your Halfway Done!!!!

6) Complete package sent to the underwriting division.

The underwriter looks at every aspect of the package to see if all the details make sense. The underwriter usually asks for other pieces of information to complete the puzzle. When extra items are asked of you, it’s important to get it back to your broker the same day.

7) When underwriting is complete and the loan is clear to close, all the documenation is sent to your title company where you will go to sign and close on your home. Funds are then wired to title company, and you can move into your new HOME!

There are some VERY important things you have to remember to do, and NOT do while this process is going on. Your actions alone may kill a real estate deal.

1) ALWAYS pay your bills ON TIME. One thirty day late can ruin your credit enough to no longer qualify for a loan. Use your credit as you normally would, but…

2) NEVER open new lines of credit or close old ones. DON’T Touch Your credit, unless advised by your loan expert. THIS MEANS, do not make large purchases or cosign on others purchases during the home buying (or refinancing) process.

I hope this information helps you when buying or refinancing your home.

 

Trisha Dingillo is the owner and author of this website and a licensed Illinois Mortgage Broker. She works specifically with investors and poor credit buyers.

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