The Loan Process: Explained

Learn what goes on "behind the scenes" when buying a home
Whether you’re buying a home or refinancing your current mortgage, there’s no getting around it: the mortgage loan process has a lot of steps involved!

In fact, for every purchase or refinance, there may be over 30 people working behind-the scenes to make everything happen.

To help shed some light on the process, I’ve put together this helpful chart. (If you’re refinancing, the inspections and real estate contingencies mentioned below will not apply to you.)

Buying a home? Start by getting pre-approved online. (It’s free!)

Refinancing? Research Sonoma County Refinance programs.

Get pre-approved with a mortgage lender

The best thing you can do as a buyer is getting pre-approved *before* you fall in love with the home of your dreams. You’re not obligated to buy a home by getting pre-approved, however, it’s also worth noting that home-sellers won’t take an offer seriously unless it’s backed by a “Pre-Approval Letter”, so make sure you don’t delay!

Make an offer

Once you’ve found “the one”, it’s time to put your offer price and terms down in writing. Because of the mounds of paperwork and legal liabilities you potentially face, this step is best-handled by a real estate agent or your real estate attorney. As a buyer, you have the choice (but not the obligation) to be represented by a “Buyer’s Agent” who will work to get you the best price and terms.

Agree on terms

Once the buyer and seller have agreed on the price, closing date, and other related items, the clock starts ticking. This time period is usually referred to as the “Contingency Period”, during which a Home Inspection is completed (among other things.)

Lender orders appraisal

The mortgage lender will send an appraiser to the property to take pictures and review comparable sales in the area similar to the property about to be purchased (or refinanced.)

Lender submits loan package to underwriting

Now that a full “loan package” is available, it’s submitted to an underwriter, where the i’s are dotted and the t’s are crossed. Phone calls are made, emails and faxes are sent, and information is verified.

Inspection contingencies released

Once the Home Inspection has been completed (if applicable), the buyer (and/or their mortgage lender) may request certain repairs. Once an agreement has been reached between buyer and seller regarding how to handle any requested repairs, the Home Inspection Contingency is removed (and the loan moves towards “Approval” status.)

Loan is approved

Now that the funding for the loan has been earmarked by the mortgage lender, the loan is moved into “Approved” status. (Just a few more steps and the loan will officially be closed!)

Loan contingencies are removed

Now that the funding is available, the Financing Contingency can be removed from the Purchase Agreement (if applicable). It is at this point the loan documents are sent to the Underwriter for Final Approval.

Loan documents are sent to Title Company

After the loan contingencies are removed, all loan documents can be forwarded on to the Title Company (or real estate attorney’s office). The Title Company is responsible for “closing” the sale, filing the proper paperwork with the county, and making sure everything and everyone is organized for the transfer of ownership.

Buyer signs loan documents

The buyer(s) will now complete a stack of paperwork dictating every aspect of the loan, including payment terms, interest rate, grace periods, and so-forth. Buyers should read all documents carefully, and make sure to ask questions about anything that isn’t 100% clear.

Title Company returns signed loan documents to lender

After the buyer(s) sign the loan documents, the lender is sent what they need to finalize their list of To-Dos before setting up the wire transfer to fund the actual loan.

Transaction recorded at County Recorder's Office

To make everything official (and a matter of public record), the pertinent documents are filed with the local County Recorder to transfer ownership from the property’s former owner to its new owner.

Buyer gets the keys

Now that all the paperwork is finalized, it’s time for the buyer to move into their new home at last! All that’s left now is deciding where to put that collection of ceramic chickens…
Contact Scott About Your Home Loan Questions

Please email me your question or scenario and I'll get back to the following business day. -Scott