I really want to help buyers understand the flow of what happens from the time they get pre-approved and the time the escrow actually closes.
The following does a pretty good job of explaining. There is one caveat to all of this: timelines depend on you, the borrower, just as much as they depend on the lender. 1. You get pre approved by providing income/asset documentation to your lender. They review this along with a current tri-merged credit report for approval (average score of the three is what the lender uses) Pre-Approval can be completed in as quickly as 24 hours.
2. Once there is an accepted offer, you must immediately provide any additional items that are needed for the loan. The lender will request a fully executed purchase contract, escrow instructions, preliminary title report and HOA documentation (if property is a condo) and order the appraisal report. Once they have everything, they submit the file to the investor. It typically takes 3 business days for your lender to receive all of the above.
3. Submit to investor and get a conditional approval. This means that the loan is approved but conditions are needed by the underwriter to move forward in the final approval process. It depends on the investor, but conditional approval can be as quick as 2-3 business days and as long as 25 business days.
4. Your lender gathers the conditions from you/escrow/agents etc. The quicker they get these items, the better so they can submit to investor. The investor reviews and signs off on conditions. Time frame can be 1-3 business days.
5. After conditions are satisfied and signed off, the investor is ready for your lender to order loan documents. Loan documents are legal documents that you will sign. Loan documents include pertinent information on the financing of the home. Two main ingredients of the loan documents are the Note, which gives the loan amount, interest rate, terms of the loan, and monthly payment, and the Deed of Trust, which shows how will hold title on the property. Time frame to order loan documents and have them sent from investor directly to escrow is about 2-4 business days.
6. Once loan documents are with escrow, the escrow company prepares them and contacts you so you can either come in and sign the loan documents at escrow’s office, or escrow can set you up with a mobile notary to come to you, if need be. Time frame is usually quick as escrow can have docs prepared within 1 day but it also depends on when you sign.
7. After loan documents are signed, escrow reviews and packages them. Escrow then sends loan documents back to investor. Time frame is usually 1 day.
8. Investor receives loan documents back. The investor will review them to make sure everything was done according to instructions (signed/notarized correctly, etc). They also check the file (and contact your lender and escrow) to make sure insurance is in and any remaining conditions that are outstanding (i.e. confirmation of escrow’s receipt of downpayment funds). Once your funds are confirmed to be in, the investor will fund the loan. Time frame for all this can be 2-4 business days.
9. Once the loan funds, the grant deed will be recorded with the title company.
10. Yahoo! The loan and purchase transaction is closed and recorded with the County and you become a proud and happy homeowner!