Once you complete your mortgage loan application, the application and required documentation is submitted to initiate the loan processing. The following sections will help you understand what is involved in this process and what you need to do to get your home loan approved.

The loan processing occurs between the time you submit your loan application, until you finally close the deal. During this time, your loan processing team will review your application and verify that the information provided is accurate. Your team will be responsible for gathering all documents, including credit reports, home appraisals, and all necessary documentation that will be used to determine your loan approval.

What Does a Loan Processor Do?

Besides your real estate agent, your loan processor has one of the most important responsibilities in your loan approval. A loan processor at ACG Funding is a financial expert who will collect and organize all your required documentation to obtain a loan. The loan processor will verify that the information provided in your application is accurate, will help you correct any unclear information, and will ensure that your application stays on track until you close.

Verifying Your Loan Application and Related Documentation

The main responsibility of your loan processor is to make sure that everything is in order. That includes verifying your application, checking all your income sources (pay stubs, W-2 forms, tax returns), your assets (checking and savings accounts, stocks, life insurance, investments), and any outstanding debt (credit cards and loans).

Your income is one of the biggest factors in a lender’s decision. Your loan processor will make sure that your monthly mortgage payment (including principal, interest, taxes, and insurance) do not absorb your monthly gross income. Lenders would like to make sure that you can be comfortable paying your current obligations plus your new monthly mortgage payment.

Another consideration in the loan process, is your obligation to obtain homeowners insurance for your new home. A homeowner’s insurance policy protects your property and your lender from any loss caused by fire, floods, and other misfortunes.

To verify your financial situation, your lender will require:

• Employment and Income Information: You will need to provide recent pay stubs and W-2 forms. A phone call to your employer may also be required for employment verification. You may also need to provide proof of other source of income, like 1099 work, rental income, or child support.
• Personal Asset and Debt Statements: Ensure you have all current and previous statements of your bank accounts, investments, loans, and any other account listed on your loan application.
• Tax Returns: Make sure you provide copies of your federal income tax for the past few years to support certain sources of income, such as self-employment work or commissions.
• Home Insurance: Obtain a copy of your insurance policy to show evidence of insurability and the details of your coverage.

Ordering Appraisals, Credit Reports, and Payoff Information

After your lender verifies your loan application and related documentation, you must proceed with the next steps. The first step is to order an appraisal.

An appraisal is a professional and impartial estimate of your home’s market value. This is one of the most critical aspects in loan processing as it ensures that lenders do not loan more money than the home’s fair market value. The appraisal value will prevent you from paying too much for a house and will also determine the loan amount.

Next, your loan processor will order a credit report. Your credit report is a record of your credit activity, how and when you pay your bills, if you have any bankruptcies, delinquent accounts, or lawsuits. Your credit history will help to predict how likely you are to make your mortgage payments on time.

Finally, if you are refinancing an existing loan, your loan processor will request details of your current loan, including your current loan balance and lender information. Your loan balance will be used to determine your new loan, as well as your new monthly payments.

The above three processes require you to:

1. Be involved in the appraisal process: You need to pay an appraiser to determine the value of the home you wish to buy. If you are refinancing your home, make sure you provide access to your property.
2. Examine your credit report: You must obtain a copy of your credit report way in advance. It will give you time to correct mistakes, pay off debts, or rectify outdated information to secure a good credit score.
3. Request payoff information: You must contact your current lender to have all details of your loan sent to your new lender. This information must include payoff amount and contact information.

The Role of Loan Underwriter

After the loan processor puts together your application and documents, your file is then submitted to the loan underwriter. The underwriter will thoroughly evaluate your file to ensure everything is complete and accurate to determine if you qualify for a loan. During the evaluation, the underwriter may encounter inconsistencies, which will require the need to provide further documentation, such as a letter to explain a job change or lower income.

Once the underwriter verifies and assesses your loan request, your loan is either approved or denied. The underwriter must make sure that your financial situation complies with all the guidelines of the loan you are applying for. If your loan request is approved, you are ready to sign all the paperwork and get ready for closing.

Finally, you may encounter situations during the approval process where lenders handle responsibilities in a different way. Every lender has its own process and rules. Some lenders may want to handle your loan from start to finish, while others may use outside sources for processing and underwriting. Make sure you contact your loan originator for any questions you may have.

To Achieve a Smooth Loan Process

Your loan process may be very stressful at times, and you are probably anxious to move to your new home – be patient. We suggest you follow these recommendations to get things moving:

• Put together all necessary documents for your loan processor as early as possible. Make sure you respond to any request right away to keep the process moving.
• Maintain regular communication with your lender to get information on your loan process.
• Let your lender know of any changes in a timely manner. Changes such as new employment information, overtime pay, debts, or other sources of income may affect your loan.

Keep in mind that the mortgage process is not simple, and can be quite confusing if you do not deal with qualified professionals. Make sure you contact one of our experience ACG Funding Loan Officers to help you get the right home loan for you, whether you are buying or refinancing.