The Right Loan For You The Loan Process Apply For a Mortgage Rent vs. Buy Calculator Your Credit Score Contact Us

Thank you for choosing Cornerstone Mortgage to assist you with your new mortgage. There are several steps to acquiring a mortgage and it is our experience that few understand what steps those are.

It is important to know that the mortgage process can be tedious. There can be Lenders, Underwriters, Escrow Representatives, Title Representatives, Appraisers, Notaries, Pest Inspectors, Roof Inspectors, Brokers, Realtors, Banks, Asset Managers, Buyers and Sellers involved in a real estate transaction. Coordinating all of the parties is time consuming, difficult and fraught with difficulties and errors.

We will work hard to ensure that your process is as smooth as it can be.  in order to help make the process as smoothly as possible we would like to take a moment to explain the process:

Step one: Determine Eligibility


A mortgage is like a recipe.  There are major ingredients and there are minor ingredients. Without the major ingredients...it is unlikely that a consumer will qualify for a mortgage. Components like an acceptable credit profile, stable employment and ability to repay the loan.  There are minor ingredients like a down payment which may or may not be necessary, sufficient credit trade-lines or other factors that may not disqualify a consumer from getting a loan but may restrict the options or terms that they have.

This process requires a consumer to provide documentation on employment, income, assets, liabilities, past credit history, previous financial matters, etc.  The list of documents will be lengthly and must be provided in order to determine eligibility.

 

Step two: Finding a House

Once approved it will be time to go shopping for a house.  You will need a Realtor if you do not have one already.  As a buyer, using a Realtor is a very important part of the process and the Realtor who works on your behalf is paid for by the Seller so there is no reason not to use one.  If you do not have a Realtor already, we will be happy to refer you to a trusted referral partner who will assist you.

Once you find a house, we will work with your Realtor to provide the home seller with the documents they need in order to consider your application.  Specifically, a seller will request a letter from us that states that we have reviewed your financial and credit worthiness and we believe that you will be successful in applying for a mortgage.  It is not a guarantee but it is a necessary first step.

Once your offer has been accepted it is time to get the file into underwriting.

 

Step three: Submitting Your Application for Underwriting

Underwriting is the process by which a lender determines whether a loan application meets their criteria and whether they will make the loan for the property you have agreed to purchase. This process can be tedious and it is very common to run into delays, obstacles and requests for additional documents….so be prepared! The simplest loans are usually the hardest!

Although we underwrite our files in house to determine eligibility, it is the lender who will ultimately transfer the money to the seller that must verify our information is correct and meets their specific requirements.  Take note that every lender has a different set of underwriting guidelines.  One lender make be willing to fund a loan that another lender will not. 

Underwriting occurs in two phases.  The initial underwrite which results in the loan being declined or conditionally approved and the final underwrite where the conditions requested on the conditional approval have been satisfactorily provided.  Once all conditions have been met we will be free to pull our loan documents, sign them and close the loan.

 

Step four: The Appraisal

Once the loan application has been submitted, we must order an “appraisal” for the property you have agreed to purchase. An appraisal is a report provided by a licensed appraiser that gives his/her opinion of the value of the property you have agreed to purchase. All lenders require an appraisal in order to determine that the property you have agreed to purchase is worth at least as much as you have agreed to pay. The method that the appraiser uses to determine his/her opinion of the value of a property is typically a comparison of the characteristics of the home you have agreed to purchase with those of similar homes that have sold within a close proximity to the home you have agreed to purchase within the last 90 days.

It is very common in the current real estate market to have appraisals come in above or below the contract price for the home you have agreed to purchase. In the event that the appraiser’s opinion of value is less than the contract price, either the Seller must lower the purchase price of the home or the Buyer must use their own funds to make up the difference between the contract price and the appraised value if the contract to purchase the property is to continue. If the property you have agreed to purchase is valued at less than the purchase price, we will work with your Realtor to resolve the matter with the Seller.

After the appraisal has been completed and any changes to the contract price for the house have been made, the Underwriter will review the appraisal and will run their own internal valuation report to verify that the property is valued properly according to their standards.

Although uncommon, a Lender can come back to us and require a second appraisal from another appraiser if they feel that the first appraisal does not accurately state the value of the property. Although it may seem strange to require an appraisal if the Lender is going to attempt to value the property on their own (especially since the government now requires that all appraisals be ordered through independent-third-party appraisal management companies selected by the Lender), it is nevertheless part of the process mandated by the government-sponsored entities that set the underwriting guidelines for mortgages. Once the appraisal has been accepted and the loan has been underwritten and the loan conditions have been met, we will be free to pull our loan documents, sign them and close the loan.

 

Step five: Closing the Loan

Once all loan conditions have been met we will request to have our loan documents sent to the escrow office originally selected by the Buyer and the Seller.  We will arrange to have you sign the loan documents here in our office with a notary.

After the loan documents have been signed we will return them to the escrow company and to the Lender for review. Once their reviews have been completed and the escrow company has completed their work, the Lender will fund the loan by wiring the money directly to the escrow company. Once the funds have been disbursed by the escrow company, you will receive the keys to your new home and the loan process with be complete.