Bozeman Real Estate Loans†
A mortgage is a loan on property or real estate that a mortgage lender or financial institution receives from you to help finance the purchase of real estate.
A borrower pledges real estate (your future property) as security for the repayment of the loan. The borrower gives the lender a lien on the property as collateral for the loan. (Borrowing to buy land is more difficult.)
Most people deciding to apply for a home mortgage loan say, “I am going to GET a mortgage.” Actually, the more accurate statement would be, “I am going to GIVE a mortgage” (on my future property).
Bozeman Real Estate Loans – Guide To The Bozeman Home Loan Process
Pre-qualification
Before the loan process begins, “pre-qualifying” is generally the first step after you make initial contact with a Bozeman lender or mortgage broker. (Discussion of Mortgage types here)
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In pre-qualification, your lender gathers information about your income and debts after which he or she makes both a financial determination about how much house you, the borrower, may be able to afford and what loan programs would be appropriate for you to explore.
Depending on whether you qualify for a mortgage loan, different programs offer varying loan amounts; ensure that you receive a pre-qualification for the variety of loan programs for which you are suited.
You want a mortgage loan that best fits your financial goals and objectives and provides you with a comfortable payment.
First-time home buyers should not be reluctant to ask as many questions as needed. There are many Montana Home Buying Assistance programs and Montana Housing Resources available to first time home buyers on this website, or email taunya@taunyafagan.com or call me at 406.579.9683 for assistance.
Steps In The Loan Process
Application
The beginning of the loan process is the time when you actually “apply” for the loan.
Loan application usually occurs between the first and the fifth day of the loan. Now, as a buyer, you are designated as a “borrower.”
Next, you complete a mortgage application with your loan officer, supplying required documentation necessary for processing the loan. Next, you may discuss points, down payments, and fees and receive a Good Faith Estimate (GFE) and a Cost Analysis, which itemizes the rates and associated costs for obtaining your loan.
Pre-Approval
Once you have applied, your lender will submit your file for automated underwriting, which is a system that reviews your credit scores, income, assets, liabilities, loan-to-value ratios, and your proposed loan details.
The underwriting system will render an immediate credit “opinion,” informing you if your file has been approved, if all your information was input correctly, and if all your information can be documented.
Any issues will hold up the process and your file will then be referred to an underwriter for “manual” review.
Processing
As soon as you submit all of the initial supporting documentation requested such as pay stubs, W-2’s, and bank statements, your loan “processing” begins.
When you sign initial disclosures and return them to your lender, money will generally be collected which will be used to order an appraisal. In addition, the lender will order a Title Insurance Commitment.
The “processor” reviews the credit reports and verifies your debts and payment histories as the VODs and VOEs are returned. If there are collections for judgment, unacceptable late payments, child support issues, etc., you are required to submit a written explanation.
The processor also reviews the appraisal and survey and checks for property issues, the time to get a home inspection, that may require further understanding. Your processor’s job is to put together an entire loan package that the lender could underwrite. When all recognized documentation needs are met, the loan package is submitted to underwriting for review.
Note: Generally, your loan officer mails out direct requests for verification of employment (VOE), bank deposits (VOD), and any other documents he/she needs for processing your loan. When initial documentation is reviewed, there may be questions or items that need to be addressed, which may require additional documentation.
Underwriting
“Lender underwriting” occurs between days 15 and 25. An underwriter is responsible to determine whether the combined package passed over by the processor is deemed to be an acceptable loan. If the processor needs additional information, you will be asked to submit it; until then the loan will be placed in “suspense” until the additional information you provide is processed.
“Mortgage insurance underwriting” (which differs from homeowners insurance) happens if less than 20% of the loan amount will be tendered toward down payment on the loan. This is the time your loan is sent to a private mortgage guaranty insurer, who will supply additional insurance to your lender in case you default on your loan.
Similar to above, if more information is needed from you, the loan goes into “suspense.” Otherwise it is usually returned to the mortgage company within 5-10 business days.
Closing
Between days 25 and 45 of the loan process, you should have your “closing,” at which time your lender “funds” the loan (to the seller of the property you are purchasing) in the form of a cashier’s check, a draft, or a wire; your lending institution then receives title* to the property you have purchased.
This is the point at which you, the borrower, complete the loan process and actually buy your property.
*When and if you pay off all loans and liens on this property, you, yourself, will be eligible to receive title.
(Note: Closings occur at different agencies in different states. For instance, some states require closings occur at a closing attorney’s office; other states use a Title or Escrow agency.)
†Taunya Fagan Real Estate does not advise on mortgage loans. Use of any information from this site or any other web site referred to is for general information only and does not represent personal advice either express or implied. You are encouraged to seek professional advice for questions and assistance on home and other real estate loans.
