October 22, 2015
The Mortgage Process
There are quite a few things that go on behind the scenes after you have applied for a mortgage. We thought you might like to know a bit about them:
During processing, the loan file is examined to ensure that all information is complete and accurate and meets the end investor's requirements. Verifications, appraisals, credit reports and other necessary documents will be ordered at this time. The goal during processing is to gather accurate facts that will be used to make decisions about the loan. Once the loan file is complete, the processor turns the file over to the underwriter.
Underwriting involves the evaluation of the loan application file. All documents will be verified and reviewed for completeness and accuracy. The underwriter will compare the factual information contained in the loan package to the guidelines of the lender and when the information is completely reviewed, will submit the application to the lender.
This is the final step! At closing, documents are prepared, assembled, signed and recorded. The mortgage is created and funds are dispersed. The title of the property passes from the seller to the buyer who makes a legal obligation to repay the debt.
How a Credit Score is Determined
Each financing program has a minimum credit score (FICO) they will accept. There are 5 factors that will determine the client's credit (FICO) score. Scores will range from 300 to 850 and the higher the score the better as it will affect both their program eligibility and the interest rate they receive.
- Are you an "on time" payer?
35% of the credit score.
- What is their total debt? If you use more than 50% of the credit available to you, it "hurts" your score. If you use more than 75% of the available credit, the score rapidly decreases. You are considered a "high risk" if you max-out your credit cards.
30% of the credit score.
- How long is your credit history? The longer, the better! Read more here about credit scores
15% of the credit score.
- How many times have you applied for credit? This is especially important in the time between the loan approval and the closing. If you apply for credit between these times and a new credit report is called for by the lending institution, it can negatively affect your rating and therefore your interest rate.
10% of the credit score.
- The type of credit you handle well. The greater the variety of credit you have (mortgage, revolving credit, student loan, car, etc...) and have handled well, the better.
10% of the credit score.
We will work with you to determine which financing program best fits your needs & individual circumstances!