Understanding the Home Loan Process
We know the home loan process can seem complicated, but let us worry about that. Our home loan advisors will work with you every step of the way, from pre-qualification to closing. To prepare you for your journey, we provided a roadmap describing the 12 central steps to secure financing for your home.
Step 1: Loan Pre-Qualification
Meet with your loan officer to pre-qualify for a mortgage loan. This service is free and will give you an estimate of how much you may be able to borrow as well as an estimate of your monthly payments. It will also show realtors that you are a serious buyer. Please note that a pre-qualification is not a commitment to lend.
Step 2: Provide Required Documentation
See our "Getting the Paperwork Together" section below for a list of documents that you will need to provide to us to process your mortgage application.
Step 3: Initial Loan Disclosures
You will receive your initial loan disclosures within three business days from the date we receive your loan application. Some of the documents will require your signature — just follow the instructions provided with the disclosure package.
Step 4: Identification of Escrow Company
The escrow or title company will hold and disburse all loan funds, prepare an accounting of the transaction, and draw up applicable documents to affect transfer of title to the property.
Step 5: Title Report
A preliminary title report will be ordered. It provides information about how the title of the property is currently held and any exceptions to title that are currently of record (for example, easements, liens and encumbrances). The report will also list standard exclusions from the title insurance coverage. A copy of the report will be provided to you. The escrow officer will collect all information necessary to "clear" the title to an acceptable condition for title insurance.
Step 6: Appraisal
We'll order an appraisal of the property, through an approved appraisal management company. Upon completion, we will provide a copy of the appraisal report to you, and we will ask you to acknowledge that you received this report before final loan documents are issued.
Step 7: Underwriting
Your loan application will be sent to an underwriter for final approval.
Step 8: Approval & Insurance
The underwriter will either issue an approval with no conditions required or an approval with conditions. In the case of the latter, additional documentation will be required prior to ordering the final loan documents. At this time, your hazard insurance policy (and flood insurance policy, if the property is in a special flood hazard area) is ordered from an insurance agent of your choice.
Step 9: Final Loan Documents
When the loan is approved, and all underwriting conditions have been met, we will prepare the final loan documents. They will be delivered to the escrow/title company for your review and signature. The escrow/title company will also prepare the final loan settlement statement.
Step 10: Signing
The escrow company will set up an appointment with you to sign your documents. You will have the opportunity to review the documents and ask questions prior to closing. You will pay any remaining costs, if applicable. Your loan funds will be deposited with the escrow/title company in the form of a wire transfer or cashier's check for disbursement.
Step 11: Lender Review
After your final loan documents are signed, the escrow company will return the loan documents to us for final review.
Step 12: Closing
Once we have approved final documents, the Deed of Trust (mortgage) will be delivered to the title company for recording with the County Recorder's Office. Once recording is confirmed, the transaction is "closed" and your loan is complete.
Thank you for considering Seattle Bank for your mortgage loan. We look forward to working with you and making your experience as quick and pleasant as possible. In order to have everything you need to get things started, be prepared to provide the following documents when we begin your loan application:
- Signed personal and business tax returns from the last two years, all pages and all attachments (W2, 1099, K-1 etc.)
- If you filed an extension, please provide a copy of the tax extension form with proof that any taxes due were paid at the time the extension was filed, along with the prior year's tax returns, including all attachments
- Current year to date signed profit and loss statement
- Your most recent 2 months asset statements (checking, savings, IRA, 401k etc.) In many cases your retirement and investment statements will only be issued quarterly or semi-annually; please provide the most recent statement. If you are considering using a printout from your bank or savings institution, it must include: your name, your full account number, the name of the institution and full documentation of the account.
- Your most recent 30 days of pay stubs, earnings statements, or LES (military only)
- Divorce decree (if applicable)
- Copy of your homeowner's insurance declarations page
- Most recent mortgage statement for any properties owned (if applicable)
- A copy of your driver's license or any other form of legible, positive photo identification, such as military ID, passport, or state-issued ID. An expired ID is not acceptable.
- Your Social Security Number will be verified. Be prepared to provide a copy of your Social Security card. If you do not have a Social Security card, please contact us.
How to Ensure a Smooth Closing
When it comes to buying or refinancing a home, what seems like a minor detail can make a big difference. If you are about to embark upon either of these processes, be sure to review the warnings below or reach out to us at any time. Our mortgage professionals are fully familiar with what to do and not to do to ensure that your mortgage loan closes smoothly and avoids unnecessary expense.
1. Don't Buy or Lease an Automobile
The lender (us!) looks carefully at your debt-to-income ratio (DTI). A large loan or lease payment can greatly impact your DTI, possibly preventing you from qualifying for a home loan.
2. Don't Transfer Bank Accounts or Move Assets from One Bank Account to Another
Often borrowers want to move money to one account so that funds for the home transaction are easily accessed. Transfers from one bank to another may show up as new accounts, however, and transfers from one account to another will show up as large and unidentified deposits, both of which must be explained. In this case, you must disclose and document the source of funds for each new account, which can delay the loan process. Your lender will verify each account as it currently stands, and make the underwriting decision based on that information; you may consolidate your accounts after the loan closes.
3. Don't Change Jobs Without First Letting Us Know
The lender will verify that you have a steady stream of income to repay the loan. A new job may involve a waiting or probationary period, which must be satisfied before income from the new job can be considered for qualifying purposes.
4. Don't Buy New Furniture or Major Appliances
As mentioned above, if the new purchase increases your debt-to-income ratio (DTI), it could disqualify you from the loan or deplete your funds to close the loan. Furniture and appliance loans that are deferred for a year or 90 days same as cash, must still be considered in your DTI.
5. Don't Run a Credit Report on Yourself
This will appear as an inquiry in your lender's credit report, and inquiries must be explained in writing. Contact us if you have questions.
6. Don't Attempt to Consolidate Bills Before Speaking to Us
Often credit reporting agencies have a delay in reporting changes. This means you may actually show more debt outstanding and a higher DTI, initially. An additional problem could be the reduction to your credit score.
7. Don't Pack Away Paperwork or Information Needed for the Loan Application
When preparing for your move to your new home, do not pack important paperwork such as W-2 forms, divorce decrees, military service orders or discharge, and tax returns with your household goods. Duplicate copies can take weeks to obtain.
What does it mean to "refinance" my mortgage?
When you refinance your mortgage, you are applying for a new mortgage, which replaces your current home loan.
What if I have an adjustable-rate mortgage (ARM)?
Every adjustable-rate mortgage is different, but refinancing may still provide you with a lower monthly payment, and may allow you to avoid the sometimes large payment increase that comes once your initial ARM rate ends. The stability of a fixed monthly payment will give you security in knowing what you'll owe every month.
This summary is provided for informational purposes only, and is not a commitment to lend. Credit and collateral are subject to approval; terms and conditions apply. Refinancing may increase the total number of monthly payments and/or the total amount paid when compared to your current situation. Programs, rates, terms and conditions are subject to change without notice.
What to Do if You Can't Pay Your Mortgage:
If you're having trouble making your mortgage payments, please read the following information. There are resources available to help you do the following:
- Develop a plan to bring your loan current;
- Adjust your monthly payments to better fit your financial situation; or
- Skip a payment in the case of temporary employment hardship, such as a layoff or medical leave.
The Following Organizations Can Provide Foreclosure Prevention Options:
- makinghomeaffordable.gov: A federal government program to support homeowners struggling with unemployment, through targeted foreclosure prevention.
- HUD-certified housing counselors can be reached by calling: 800.569.4287
- knowyouroptions.com: A resource provided by Fannie Mae.
- homeownership.wa.gov: Foreclosure prevention and information program run by Washington State.
If You Do Talk to Someone Regarding Your Loan, Make Sure You Have the Following:
- A copy of your pay stubs for the last 2 months
- Bank statements for the last 2 months
- Your monthly household expense budget
- A completed Financial Statement Form
Servicemembers Civil Relief Act (SCRA) Benefits:
Eligible servicemembers and their spouses or civil partners may receive:
- Foreclosure protection
- Fee protection
- A special loan modification program for those facing financial challenges
- A reduced mortgage interest rate without fees or refinancing
These benefits last for 12 months after the end of Active Duty Orders. If you are an active duty member of the military, including the Reserves or the National Guard, and your loan was originated prior to your active duty date, you may be eligible for benefits.
How can I help close my loan as quickly as possible?
Make sure your lender has all the requested documents, avoid making any credit purchases (such as furniture and cars), and make sure your lender knows about any major life changes, like new jobs.
What is the first step I should take when I decide to buy a home?
Get pre-qualified for a mortgage loan. This will help you decide how much home you can afford, and which mortgage programs are available to you. This will make your offer more desirable to sellers. It's also a good opportunity to understand the steps involved in obtaining a mortgage.
Is it a good time to purchase a home?
Yes! In most cases, monthly mortgage payments are often comparable to rent — and unlike rent, a fixed-rate mortgage doesn't increase with inflation, and can give you potential tax benefits (talk to your tax advisor).
How do I decide whether it makes financial sense to refinance my home?
Ask yourself what you'd like to achieve. If you plan on continuing to own your home, and you want to lower your payments, convert your mortgage from an adjustable to a fixed rate, or access equity, chances are it makes sense.
Is it true that I need to lower my rate by 1% for a refi to make sense?
No! There are many other reasons for refinancing, such as getting cash out (accessing the available equity in your home) for a remodel or other needs, changing the loan terms so you can pay off your mortgage early (changing the amortization), or simply changing from an ARM to a fixed rate.
My rent just went up. Can I buy a condo with a low down payment?
Yes. Depending on location, sale price, and loan program, it's possible to buy with a much lower down payment than you'd expect.
Are there benefits from these low interest rates other than just lower monthly payments?
Yes! Lower interest rates could help you afford a larger home now — or upgrades like a nicer kitchen.
I'm considering buying a rental property; is it hard to get financing these days?
Loans on single-family rental and investment properties aren't the hassle you might think — and a variety of financing options are available.
How long should I expect the loan process to take?
Different mortgage lenders take different amounts of time, from two weeks to three months! Make sure you ask your lender how long their average loan takes. And just so you know, we close our loans in as little as two weeks.
Where can I find more information?
If you can’t find the information you are looking for, feel free to contact us, and one of our helpful loan specialists will be in contact with you shortly.
Interested in the many terms related to the mortgage process? Take a look at our glossary and find out what each means.