What comes next in the process of a loan accepted?

When you apply for a loan and submit all of the required mortgage application documents to the loan officer, your application will undergo an underwriting process. The underwriter will determine whether you are approved for your mortgage loan. Once approved, the lender will provide you with a commitment letter and require you to meet certain conditions before closing.

Disclosure Forms

The loan officer must provide you with important disclosure forms required by law. The most significant forms are the Good Faith Estimate and the Truth-In-Lending Disclosure Statement. The Good Faith Estimate form outlines your settlement and closing costs. The loan officer should provide this form to you within three days after you submit your application. The Good Faith Estimate form does not provide the actual closing costs; however, it provides an estimate of the costs you are likely to incur during closing on the mortgage loan. The Truth-In-Lending Disclosure Statement details the total costs of the mortgage based on terms of the loan agreement. You will also be provided with this document after you submit your application.

Commitment Letter

After the lender approves your loan, you will get a commitment letter that stipulates the loan term and terms to the mortgage agreement. The commitment letter will include the annual percentage rate and the monthly costs to repay the loan. It will also include any loan conditions prior to closing. You will be required to sign the letter and return it to your lender within a specified time.

Conditions to Closing

Before closing, the lender may require you to provide a copy of a homeowner’s insurance policy for the property, flood insurance and title insurance. You may also be required to submit an inspection report and a survey report of the property which explains the boundary lines, easements and encroachments along the boundary lines.

HUD-1 Settlement Statement

You will have the opportunity to review the HUD-1 Settlement Statement within 24 hours before closing. The HUD-1 Settlement Statement details the closing costs including the credits and debits of the borrower and the seller. It will also include the date, location and time of closing.

Closing

During closing, you will sign the documents to accept the mortgage. It may take place at the escrow agent’s office or the title company. Depending on your state, you may be required to sign a mortgage agreement or a deed of trust. California residents must sign a deed of trust. The deed of trust provides the lender the right to foreclose on the property if you defaut on the loan. After you sign the paperwork accepting the mortgage, your lender will transfer the funds to the seller. At this point, the seller must sign the deed and convey the property to you. Although the seller transfers the property interest to you, a trustee holds title to the property until you pay the entire mortgage loan.