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The Loan Process

 

Prequalification

Prequalification occurs before the loan process actually begins. The lender gathers information about your income and debts, and makes a financial determination about how much you may be able to afford.  This process normally takes 24 hours upon submitting the  Executive Summary, 1003 Loan Application, Credit Report, Digitial Pictures of Subject Property, and Mortgage Broker Agreement.  Upon receiving your Pre-Approval, the underwriter will included a list of conditional documents for the final approval.  

It's a good idea to know how expensive a commercial property you can afford before you start shopping for one! If you are refinancing the loan on your existing property, then the prequalification process should help you decide whether refinancing is a good idea for you.

Application

The application is the beginning of the loan process and either occurs after you have found a property you want to buy or have determined that you wish to refinance the loan on your existing home. You complete a 1003 application for a particular loan program and, supply all of the required documentation for processing. Various fees and down payment options are discussed at this time. The loan officer will request the following documents before processing.  1003 Loan Application, Tri-Merge Credit Report (responsiblity of borrowers to provide), Executive Summary, Digitial Pictures of Property, Rent Roll (if applicable), Income and Expense Sheet on subject property (If applicable), other documents maybe requested later for verification purposes.  

Processing of your Estimated Loan

The lender will typically submit the application package to the underwriting department that will provide the lender with the necessary documentation needed for loan approval. In some cases, the underwriter may request to speaker to the borrower or request additional information in the decision making process.

The lender's processor reviews the credit reports and documentation to verify your employment, debts, and payment histories. If there are unacceptable late payments, collections, judgments, etc., the processor may requests a written explanation from you. The processor also reviews the appraisal and survey and checks for property issues that may affect final loan approval. The processor's job is to put together an entire application package for the lender's underwriter.

Underwriting

The lender's underwriter is responsible for determining whether the application package prepared by the processor meets all the lender's criteria. If more information is needed, the loan is put into "suspense" and you will be contacted to supply more documentation before closing.

If the underwriter approves the loan, the lender issues a conditional commitment to lend, orders title insurance, works with you to clear all conditions to its commitment to lend, and then schedules a closing time. Conditions to the lender's commitment may include issues with credit, income, or the property that may arise during the processing and underwriting process.

Closing

The closing will occur after all conditions are cleared and the lender issues a full loan approval. At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the closing agent, who disburses funds, in exchange for the title transfer to the property. This is the point at which you finish the loan process and actually refinance or buy the commercial property, subject to the lender's loan. Closings occur at different places in different states. For instance, some states require that the closing take place at a closing attorney's office, while others use a title or escrow company. You may also be able to close at your home or office.

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