A Quick Guide to the Loan Process

1. Check Your Credit
Credit scores have always been important for home buyers, but even more so today as lenders have tightened their guidelines.
So your first step should be to review your financial situation. You can order your credit reports yourself from Experian, Equifax and TransUnion, and check them for errors. You will also need to order your credit score (different from your reports) to see how you stack up against the national average.
Even more effectively, contact us.  We will pull your entire credit report, including your scores and will discuss exactly where you stand credit-wise.  While we don’t do credit counseling, we can offer sound advice on ways to improve your scores.  Keep in mind, it is best to get good advice from a loan professional!  Too many times, a consumer can make drastic credit errors by paying on old accounts or by closing accounts.  Talk to a professional; that’s what we’re trained for!
2. Determine Your Budget
Decide the amount of payment that you feel comfortable with.  A lender can tell you the amount you qualify for — but you must decide the amount you feel is right for you.  Talk to your loan officer and make sure they understand exactly what you are looking for in a payment and then they can help you tailor the loan amount so that you will be happy with your purchase.
3. Research and Choose a Type of Mortgage
There are many types of loans.  For most home buyers, an FHA-insured loan or a conventional loan will be the best choice.  Take a few moments to read over the Available Loans section of this website to get some more information on different types of loans.  Of course, we will be glad to discuss the type of loan that will be the best option for you based on your credit, cash reserves, and job history.
4. Get Pre-Approved for a Loan
Pre-approval is a process in which a mortgage lender reviews your financial and credit history to determine your “creditworthiness” … an industry term that means: “How much of a risk is this person, and how much are we comfortable lending?” When you get pre-approved for a certain loan amount, there’s a good chance that you’ll receive final approval for that amount as well, when the time comes.
Having a pre-approval letter in hand also shows sellers that you are serious about (and capable of) purchasing their home. This can make a big difference in hotter real estate markets, where the seller may receive multiple offers from competing buyers.
To be pre-approved, your loan officer will take an application from you and will conduct an in-depth interview, usually over the phone, to gather the required information. 
5. Find Your Home and Make an Offer
You and your real estate agent will work together to identify what you want in a home and to locate the property.  Once you’ve decided on a potential home and you want to make an offer, the loan officer will gladly work with you and your agent to help structure the best offer for you. 
6. Offer Accepted
If the seller accepts your offer, you will be asked to put up Earnest Money.  This can be any amount, usually $500 - $1000, in the form of a Cashiers Check made out to the title company that is handling the transaction.  The title company will hold these funds and should the purchase go through, this amount will be credited to you at Closing.  You will probably also put up a small amount, usually $50-$100, in what is called Option Money.  This gives you the “option” of backing out on the deal and your realtor will have discussed that with you when he made up the offer.  This Option Money goes directly to the seller but will probably be credited back to you at closing if the realtor specifies that in the offer.
7. Good Faith Estimate and Disclosures
Once you have decided on a property and have an executed contract, your loan officer will create a packet of documents for you to review and sign.  These documents are called Disclosures and are for informational purposes only.  They are in no way binding but lenders are required by the government to provide this information to borrowers in the interest of full disclosure and keeping the consumer informed.  The most important of the documents that you will review is the Good Faith Estimate which lists the fees and expenses connected to the purchase transaction.  Your loan officer will gladly go over this document with you in detail and you can at this time decide if you want to continue the loan process. 

8. Home Inspection and Appraisal
You will probably want to get a home inspection to make sure there are no surprises in the condition of the property.  Your realtor will assist you with that, using either the home inspector that you specify or suggesting one from a list of inspectors with which the agent is familiar.  After the property has been cleared to the satisfaction of you and your Realtor, we will order an Appraisal.  This service is performed by an approved appraiser based upon the type of loan that you are getting and according to the requirements of that loan type.  For instance, FHA requires FHA-approved appraisers to evaluate the condition and value of the property based upon FHA standards and guidelines.  If the appraiser makes any notation of “required” repairs, you and the realtor will be notified and the details of the transaction may have to be renegotiated.
9. Loan Submitted to Underwriting
After the Appraisal has been satisfactorily completed, we will finish preparing to submit your loan to our underwriting department.  We will ask for updated income documents, such as pay stubs and bank statements.  It’s a good idea to keep all of these documents together so that you can produce them quickly when the loan officer asks for them.
10. Underwriter Review
The underwriter reviews the loan file.  This includes your credit information and the property information.  Many times, the underwriter will send a list of additional requirements for the loan officer to submit.  This list is called “Loan Conditions” which basically means that the loan will be approved upon the condition that this additional info is provided.  Working closely with you, we’ll gather the requested info and send it to the underwriter.
11. Underwriter Approval
The loan officer is notified that the loan has been approved.
12. Document Draw
The Underwriting Department sends the file to their attorneys who draw up all the legal loan documents that you will be signing at closing.  After the attorneys have completed this packet of documents, the packet is sent to the designated title company.
13. Closing / Settlement
The Title Co. receives the file and creates a document called a HUD1 Settlement Statement.  This looks like a ledger sheet and details what the buyer is paying and what the seller is paying.  The preliminary HUD1 is sent to the realtors and to the lender and loan officer for review before you are sent a copy.  Once all parties have checked and re-checked this document to make sure it is correct, you will receive a call from your realtor, your loan officer, and / or the title company to schedule the closing and to let you know the exact amount to bring to closing.  You will need to bring a Cashiers Check made out to the title company and you will also need to bring a valid drivers license.  If you are married but your spouse is not going to be on the loan, they will still need to come to closing.  Texas is a community property state so the non-purchasing spouse sill holds title to the home and will need to sign the deed and a few other non-loan related documents.
Usually, the sellers and the buyers do not sign at the same time, they will have different appointments times on the same day.  After all parties have signed, the title company sends signed copies to the lender who then releases the funds for the purchase to the title company who then distributes it to the appropriate parties; the seller and the realtors.  Once these funds are released to the title company, you will receive the keys to your property.  CONGRATULATIONS!  You are now a homeowner!