digest
Short Summary
Main recommendation: Go through the mortgage process step by step, understanding each stage (pre-approval, application, contract, appraisal, underwriting, conditional approval, closing disclosure, clear to close, and closing) so you know what to expect before you get the keys. The speaker, a loan originator with Modern Mortgage, says the process is confusing and presents it as a sequence of stages to make it easier to follow.
Key Points
- Pre-approval involves a client questionnaire for a financial snapshot, then submitting documents such as W-2s, pay stubs, and bank statements, plus a credit check.
- Once you have a pre-approval, you can work with a realtor to find homes, then write a contract on the one you choose; the lender receives a copy.
- The lender packages your application and documents into one file for underwriting, and may request updated pay stubs or other documents.
- The appraisal is ordered early because it can take a week or two; the appraisal is paid upfront.
- Underwriting checks that the file meets federal guidelines, and typically results in a conditional approval with a few items to clear up.
Details Worth Noting
- Concrete instructions:
- Expect to fill out a client questionnaire and then submit W-2s, pay stubs, and bank statements to verify your application.
- Once underwritten, if you get a conditional approval, fix the listed items, such as a missing bank statement page or shopping for homeowners insurance quotes, so the file can be cleared.
- Review the loan estimate carefully, which lists down payment, mortgage insurance, homeowners insurance, taxes, principal and interest, title fees, and recording fees, before the loan goes to underwriting.
- Compare the loan estimate with the closing disclosure; the speaker says the loan estimate is usually a bit overstated and the final closing disclosure from the title company shows the accurate fees you will pay at closing.
- The speaker notes there are hundreds of loan product types, and choosing the wrong one can cost a lot over the life of the loan.
- A conditional approval is described as normal, with a few conditions to meet after underwriting.
- Clear to close means the loan process is complete and only the closing appointment remains, when the loan is funded and you receive the keys.
