The mortgage process

The mortgage process differs slightly from lender to lender. However, you can expect the following steps when you apply, either online or in the traditional way:

1. Complete an application. This sets the process in motion. You can apply before you find the property or if you have made an offer. At this point you need to be prepared to pay the appraisal and application fees.

2. Credit check and prequalification. With your approval and payment, the mortgage lender checks your credit record. This can assist you in determining what type of loan (or loans) you qualify for if you don't know already. However, you should note that each time your credit is checked, there will be a record of it. It may look as if you are applying for loans in different places, which may lower your credit rating in the process.

3. Telephone contact by a loan officer. If you have applied for a mortgage online, a representative of your online mortgage company will contact you by e-mail or telephone to verify your loan application information.

4. Rate lock and appraisal. Once the loan amount is determined, your loan type and rate will have a "lock-in" that guarantees your interest rate for around 45 days. The lender orders an appraisal of the property.

5. Loan documentation, verification, and other paperwork. This is where the fax and U.S. mail come into play. You'll receive a printed copy of your loan application, disclosure forms, and a document checklist from your lender. The disclosure statements include a truth-in-lending statement (Regulation Z), a copy of the Housing and Urban Development (HUD) guidelines, and a settlement costs booklet (if you are getting an FHA loan). The law requires these statements, so if you don't receive them within three days after submitting your loan application, ask for them. These disclosure forms should indicate the exact amount you will have to pay for the loan and how much you will have to pay out-of-pocket. At this point, the lender analyzes your loan application for completeness. Then the lender verifies the information submitted, confirms the value of the property with the appraisal,and determines if the property has any encumbrances, judgments, or liens.

6. Loan submission to lender. When all the paper-work has been turned in and processed, your loan representative submits the loan package for underwriting.

7. Lender underwriting and final approval. A loan underwriter reviews the loan package and faxes an approval and any conditions needed for approval to the loan officer.

8. Loan documents delivered by express mail. The lender completes the loan package and delivers it to the escrow agent. The escrow agent contacts you and arranges a convenient time to sign the documents. This event is coordinated with the loan closer, the seller, the real estate agent(s), and the escrow agent.

9. Settlement meeting or closing. You go to the office (this may be the first time you have to leave your computer) and sign the documents.The lender reviews the documents and the escrow agent requests a wire transfer of the loan funds, and records and closes the transaction. The closing is a formal meeting between the buyer, seller, real estate agent(s), and escrow agent. It is the day the property changes ownership. The exact procedure may vary from one state to another, but the results are the same. You get the keys to your new home!

Keep a copy of every piece of paper you sign at the closing meeting. In addition to the closing documents, keep your homeowners and title insurance documents in a special file. Thesettlement form is especially useful when youare preparing your income tax report or if you sell your home.