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The Traditional Loan Process
To take the mystery out of mortgages, here is an outline of the basic loan process.  Whether you are buying a home, refinancing an existing mortgage, building your dream home, or applying for a home equity loan, the steps are similar.
 

Analysis
Your loan application is submitted to your loan officer, who will become your professional representative in the loan process. Your loan officer will assemble the documents in your file, and review your file with two things in mind: Do you  qualify for the type of loan you want, and will it pass smoothly through the underwriting process. 
 

Packaging
Your loan officer collect all the documentation and try to anticipate any unusual circumstances that may affect your loan approval, and write a cover letter to the lender that emphasizes your strong points and "sell" you as a borrower.

Once your loan package is put together with all appropriate notes, it goes to a loan processor, who will order any additional information the lender may need. This may include, for instance, verification of your bank balances, employment, and mortgage or rental payment history. However, there are also special types of loans that do not require such things employment, income verification etc., often called LOW DOC, NO DOC, STATED INCOME etc.

Typically, these loan package items often take about a week to gather, then your loan is ready to submit to a lender.
 

Submission and Underwriting back to top
The lender sends it to the underwriting department, which reviews the file for compliance with the guidelines specific to the program you have selected, and assesses whether or not you are a good credit risk. The underwriter is the first, but most important, gate through which you must pass to loan approval.

One of four things can happen here:

• If you are not qualified for the program, you are declined. This is a rare occurrence, but it happens sometimes even when the loan package we supplied seems to be in perfect order.
   

• Your loan is put in "suspension." It is not approvable in its current form because there are some important questions about the interpretation of your loan package. However, we are given a chance to address those questions, and the implication is that the loan will be approved if the questions are addressed in a satisfactory manner.
   

• You are approved and ready to go, with no further conditions or questions. This is rare; too, as each underwriter focuses on different areas, and though they want to make as many good loans as possible, it is their job to question your file.
   

• By far the most common outcome is that you are conditionally approved subject to meeting certain well-described conditions.
   

• In some cases, the loan cannot be approved at the targeted rate we initially applied for. And in some of these situations we are then given the option from the said lender to accept a higher interest rate. The other option is to notify you of the complications and resubmit your loan to a different lender for the same or a different loan and or rate.

 
Sign-Off back to top
At approval, a title company becomes heavily involved. The title company is a neutral third party that, for a fee, holds all the documents and funds in escrow, and ensures that all parties get what they say they want, or points out where differences lie, so the parties can resolve them.

Your loan officer find out when you would like to sign the loan papers. Documents are then ordered from the lender to be submitted to the title company, giving the title company at least 24 hours to review the documents, comply with the lender's instructions, and draw up the papers for your signature.
 

Funding back to top
Once you have signed the papers, the title company sends the completed papers back to the lender for funding approval. In this process, the lender confirms that all its instructions to the title company were followed, and approves disbursement of the funds.

If this is a purchase transaction, funds are wired to the title company.
 

Recording and Close of Escrow back to top
The title company, once funds are received, reviews the file one last time to verify that all instructions are clear and consistent, and that all parties are in agreement.

The title company then disburses funds strictly per written instructions. The next day, they record all the legal documents that have been executed, and record a re-conveyance on all old liens. Once the new loans (and the grant deed in the case of a purchase) have been recorded, the loan and the escrow are considered closed.