Pre-qualification marks the beginning of the loan process. Once a lender reviews a borrower’s income and debts, they can determine how much the borrower can afford for a home. Since different loan programs may yield varying outcomes, it’s recommended to get pre-qualified for each type of loan the borrower could potentially qualify for.

Mortgage companies focus on two main factors when determining approval for homebuyers: the borrower’s ability to repay the loan and their willingness to do so.

The ability to repay is typically assessed by looking at the borrower’s current employment and income. Lenders generally prefer borrowers who have been employed at the same company for at least two years, or at least have experience in the same field for several years.

Willingness to repay is assessed by how the borrower intends to use the property—whether they will be living in it or renting it out—and is also influenced by past financial behavior, such as credit history or rental payment records.

It’s important to keep in mind that there are no rigid, universal rules. Each applicant is considered individually, meaning that a weaker area might be offset by stronger points elsewhere. Mortgage companies depend on making loans, so they are motivated to help you qualify where possible.

To effectively evaluate a mortgage program, a borrower should consider how long they plan to keep the loan. If you expect to sell the house within a few years, an adjustable-rate or balloon loan might be a better fit. On the other hand, if you plan to stay in the house long-term, a fixed-rate loan could be a more appropriate option.

With so many loan programs offering different rates, points, and fees, shopping for a mortgage can be overwhelming and time-consuming. An experienced mortgage professional can assess your unique situation and recommend the most suitable loan program, helping you make a well-informed decision.

The next step in the loan process is the application. With the assistance of a mortgage professional, the borrower fills out the application and submits all the required documentation.

A loan application is considered complete only when the following information has been provided:

(1) Your full name,

(2) Your income details,

(3) Your Social Security number
(along with authorization to check your credit),

(4) The address of the home you plan to purchase or refinance,

(5) An estimate of the home’s value, and

(6) The loan amount you’re requesting.

A Loan Estimate is a three-page document you receive after applying for a mortgage. It provides important details about the loan you’ve requested. You’ll receive this form within three days of submitting a fully completed loan application.

The Loan Estimate includes key information such as the estimated interest rate, monthly payment, and total closing costs for the loan. It also outlines estimated taxes and insurance costs and explains how the interest rate and payments might change in the future. Additionally, the Loan Estimate will highlight any special features of the loan, such as prepayment penalties or negative amortization, where the loan balance increases even if payments are made on time.

The form is written in clear language to help you understand the terms of the mortgage loan you’ve applied for. All lenders are required to use the same standard Loan Estimate, making it easier for you to compare loans and choose the one that best suits your needs.

Receiving a Loan Estimate does not mean your loan has been approved or denied. It simply outlines the loan terms available to you if you decide to proceed with the application.

Once you receive your Loan Estimate, you’ll need to decide whether to move forward with the application. If you choose not to proceed, no further action is required. However, if you wish to continue, you must inform us in writing or by phone that you intend to proceed with the loan application.

Lenders are required to honor the terms of the Loan Estimate for 10 business days. If you decide to move forward after this 10-day period, please be aware that market conditions may require us to update the terms and estimated costs, and you may receive a revised Loan Estimate.

After the application is submitted, the mortgage processing begins. The processor orders the Credit Report, Appraisal, and Title Report. They then verify the details provided on the application, such as bank deposits and payment histories. Any negative credit marks, such as late payments, collections, or judgments, will require a written explanation.

The processor also reviews the Appraisal and Title Report to identify any property issues that may need further investigation. Once everything is verified and complete, the entire mortgage package is prepared and submitted to the lender.

After completing your loan application, accepting the Loan Estimate, and confirming your intent to proceed, we will request specific documents to finalize the approval process. While the following list provides an overview of what may be required, it is not exhaustive. Once you reach this stage, we will provide a tailored list of documents needed for your particular loan.

For salaried borrowers purchasing or refinancing a home, you will need to submit the last two years of W-2 forms and one month of pay stubs. If you’re self-employed, the last two years of tax returns are required. If you own rental property, we will need rental agreements and the last two years of your tax returns. To help expedite the process, we recommend submitting your bank, stock, and mutual fund account statements for the past three months, along with the most recent statements for any brokerage or IRA/401(k) accounts you hold.

If you’re requesting a cash-out loan, a “Use of Proceeds” letter will be needed. If applicable, please provide a copy of your divorce decree. Non-U.S. citizens should submit a copy of their green card (both front and back), or, if not a permanent resident, a copy of your H-1 or L-1 visa.

For Home Equity Loan applicants, in addition to the documents listed above, you will need to provide a copy of your first mortgage note and deed of trust, which are typically found in your mortgage closing documents.

When applying for a home mortgage, many borrowers don’t need to worry too much about their credit history. However, it’s a good idea to review your Credit Report before applying so you can address any potential issues ahead of time.

A Credit Profile is a record of your credit history compiled by various consumer credit reporting agencies. It reflects how you’ve managed loans and other financial obligations. The main sections of a credit profile include:

• Identifying Information
• Employment Information
• Credit Information
• Public Record Information
• Inquiries

Note that personal details such as your race, religion, health, driving record, criminal background, political views, and income are not included in your credit profile.

If you’ve experienced credit issues, be ready to discuss them openly with a mortgage professional. They can assist you in drafting a “Letter of Explanation.” Mortgage professionals understand that there are legitimate reasons for credit problems, such as unemployment, illness, or financial hardship. If you’ve corrected past issues (e.g., rebuilding credit), and your payments have been timely for over a year, your credit may still be considered acceptable.

The mortgage industry has its own terminology when it comes to credit ratings. Credit grading takes into account factors such as payment history, debt levels, bankruptcies, equity, credit scores, and more. Credit scoring is a statistical method for assessing the risk of a mortgage application. It evaluates factors such as past delinquencies, derogatory payment history, current debt levels, length of credit history, types of credit, and the number of inquiries made.

You’ve probably heard of credit scores—the most common being the FICO score. Developed by Fair, Isaac & Company, FICO scores are used by the three main credit bureaus: Equifax (Beacon), Experian (formerly TRW), and TransUnion (Empirica).

FICO scores are calculated using information from your credit report, but they do not consider income, savings, or your down payment amount. The score is based on five factors:

• 35% Payment History
• 30% Amount Owed
• 15% Length of Credit History
• 10% New Credit
• 10% Types of Credit Used

These scores help lenders decide which loan programs to offer and determine underwriting levels, such as Streamline, Traditional, or Second Review. However, they are not the sole factor in deciding the program or interest rate you’ll qualify for.

While FICO scores have only become a key component of mortgage lending since 1999, they’ve been used for consumer lending by retail merchants, credit card companies, and banks since the 1950s. Data from large scoring projects show that these scores are reliable and effective.

To improve your credit score, consider these tips:

• Pay your bills on time.
• Keep credit card balances low.
• Limit the number of credit accounts you have, and cancel those you no longer use.
• Ensure the information on your credit report is accurate.
• Be cautious about applying for new credit and avoid unnecessary credit checks.

A borrower with a score of 680 or higher is considered an A+ borrower. Such a borrower will likely go through “automated basic computerized underwriting” and can close the loan in just a few minutes. These borrowers typically qualify for the best interest rates.

For scores between 620 and 680, underwriters may look more closely at the application to assess potential risk. Additional documentation may be required, and while these borrowers may still secure favorable rates, the process may take longer to finalize.

For scores below 620, borrowers typically don’t qualify for the best rates and may need to work with “sub-prime” lenders. The terms offered will be less favorable, and more time may be needed to find the best rates.

When credit issues are present, other factors like equity, income stability, assets, and documentation become even more important in the approval process. Various combinations of factors can impact your credit grade, but serious issues like late mortgage payments or bankruptcies can significantly lower your score. Patterns such as multiple recent inquiries or numerous outstanding loans may also raise red flags. However, a consistent history of late payments in the same period is less concerning than scattered late payments over time, as it indicates a greater willingness to pay.

Appraisal Basics

An appraisal is the process of determining the value of real estate ownership rights. The appraiser’s role is not to create value but to interpret market data and provide an estimated value. The appraiser considers various factors, including the location, amenities, and physical condition of the property. Extensive research and data collection are required before the appraiser can form a final opinion of value.

To determine the property’s value, appraisers commonly use three approaches, all based on market data:

1. Cost Approach: This method estimates the cost to replace the property’s improvements, taking into account any physical deterioration, functional obsolescence, or economic obsolescence.

2. Comparison Approach: This method analyzes recent sales of similar properties (comps) in terms of size, quality, and location to estimate the value of the property.

3. Income Approach: Primarily used for rental properties, this approach calculates the value based on the property’s income-generating potential. It is less commonly applied to single-family homes, as it focuses on what an investor would pay based on the property’s net income.

Each of these methods helps appraisers arrive at an informed and accurate value for the property in question.

Once the processor has gathered all necessary verifications and documentation, the complete package is submitted to the lender. The underwriter’s role is to assess whether the loan package meets the required criteria. If additional information is needed, the loan is placed in “suspense,” and the borrower is contacted to provide the required details or documents. If the loan meets the requirements, it is approved and moved into an “approved” status.

The Closing Disclosure is a detailed five-page document that provides you with the final terms of your mortgage loan. It outlines key information, such as the loan terms, projected monthly payments, and the closing costs or fees associated with securing the mortgage.

Legally, we must deliver the Closing Disclosure to you at least three business days before your loan closing. This allows you time to carefully compare the final terms and costs with those from the Loan Estimate you previously received. It also gives you an opportunity to ask any remaining questions before you proceed with the closing.

• Bring a cashier’s check for the down payment and closing costs (if required). Personal checks are typically not accepted, and if allowed, may cause delays until the check clears.


• Carefully review the final loan documents. Ensure the interest rate and loan terms match what was agreed upon, and verify that all personal details, such as your name and address, are correct.


• Sign the loan documents.


• Provide identification and proof of insurance.

A mortgage transaction typically takes 14-21 business days to process. Thanks to automated underwriting, this timeline has been greatly reduced. Get in touch with one of our experienced Loan Officers today to discuss your mortgage options or apply online, and a Loan Officer will reach out to you quickly.