Loan Process

Getting a mortgage is a multi-step process, but understanding each stage can make it much more manageable. Here's a breakdown of the typical steps involved: 

1. Pre-Approval:

• Assess your finances: Before you even start house hunting, determine how much you can comfortably afford. This involves reviewing your income, expenses, debts, credit score, and desired monthly payment.
• Schedule a Free Strategy Consultation with ACB Mortgage Solutions: Whether you decide to complete your application online at your convenience or schedule time to speak with a members of the ACB Mortgage Solutions team, we will ask you a series of questions and have a general discussion to get a better understanding of your current situation, your timeline, your goals, and any factors that may impact your pursuit of a loan.
• Get Pre-Qualified: A Pre-Qualification is a "high level" overview of your situation based on what you told us, and allows us to explore different programs and options that you may be eligible for, and a potential budget. While we can get you a Pre-Qualification without verifying your documentation, we highly encourage all of our clients to take the extra steps to become Pre-Approved to strengthen your candidacy for a loan.
• Provide Requested Documentation: As soon as you complete your Free Mortgage Strategy Consultation, we will ask you for various documents to verify the information that you provided. These documents will help us to facilitate identifying your budget and programs that are available to you with significantly more certainty and confidence.
• Get Pre-Approved: Now that your documentation is in, we take the initial Pre-Qualification and go a step further, validating the information you provided and making certain that all information is calculated in the manner an underwriter for a lender would do so. We then run your file through a lender's system, known as an Automated Underwriting System, or AUS, to get findings on your file. Once we have AUS findings with an approval, paired with the verified and accurate information, we are able to write a Pre-Approval letter for your Realtor in any amount up to and including the value we ran the findings for.  A pre-approval letter demonstrates to real estate agents and sellers that you're a serious buyer.  

2. Find a Property & Make an Offer:

• Identify your Realtor: If you did not already identify a Realtor to assist you with locating your new home, now is the time to do so. A Realtor will want you to know what your budget is and to have a Pre-Approval letter before they help you identify and begin looking at properties. If you do not have a Realtor, we would be happy to refer someone to you from our network of Realtor Partners.
• House Hunting: Armed with your Realtor and Pre-Approval, begin looking at properties to find a home that meets your needs and budget.
• Make an Offer: Once you've found the right home, make a formal offer and submit an earnest money deposit to secure it. At this point, you or your Realtor would reach out to us and request a customized Pre-Approval letter to be submitted along with the offer for the property. We will provide one for each individual offer direct to your Realtor.
• Get an Accepted Offer: Congratulations! The seller accepted your offer! Perhaps there was some negotiating, or a little back and forth finalizing the deal, but you are now moving towards buying the home you picked out.
• Due Diligence: Typically your Realtor will insert a week or two between your offer and the Purchase and Sale, or P&S. During this time, depending on the terms of your offer, you have the option to request a "home inspection" just to have peace of mind that there are no issues you will be inheriting with the purchase that you are not aware of. The results of which, your Realtor likely included wording in the offer that allows you to walk away from the deal and be reimbursed your money from the offer if you're not happy with the results of the inspection.
•  Identify your Closing Attorney: You can use any Real Estate / Title Attorney you wish. More often than not, clients will use a referral from either their Loan Officer or Realtor. We would be happy to refer an attorney we have worked with previously to you if you need it.
• Refresh your Documents: This gap between the offer and the P&S is when the team at ACB Mortgage Solutions is going to be asking you for updates. The home hunting process can take days, weeks, months, or years. Documentation goes "stale" as it gets old. You can update us as new documents come in (such as pay stubs and bank statements), or, this period between the offer and the P&S we will be letting you know exactly what we need and we'll express a sense of urgency in getting it to us. NOTE: Please remember, throughout the whole process, if anything changes in your situation (you make more money, or less, a job changes, you bought a new car, there's a new fixed bill, a bill was permanently paid off, etc), you should inform the ACB Mortgage Solutions team as soon as possible so we can assess whether the change impacts your budget and ability to purchase your home. The last thing anyone wants is to get an accepted offer, have you send updated documentation, and we find something unexpected that derails the entire purchase for you.

3. Mortgage Application & Processing:

• Receive the Purchase & Sales: Once your P&S is signed, and your second payment is made, we are officially "on the clock." The team here at ACB Mortgage Solutions will look to submit your loan same day as we receive the fully executed P&S, or next day at the latest.
• Identify Lender: Now that we have your P&S, it's time to determine which lender we are sending your file to. While we picked a lender to run AUS during the Pre-Approval process, that does not mean that is the lender we submit your loan to. A variety of factors will be considered when we submit, including any special niche programs you may need, priorities you have (do you need a lender that is fast? Do you need a lender with the lowest rate? Do you need a lender that accepts certain credit constraints?), and best suits your needs and financial situation.
• Loan Processing: Once we have the P&S and have identified the lender we are sending the loan to, the final member of the ACB Mortgage Solutions team becomes involved - the Loan Processor. Your Processor will gather all documentation provided and once again verifies your income, assets, and debts. This includes ordering credit reports (if not done already), verifying employment, and ordering a property appraisal. They will also make certain they have the proper information for your Closing Attorney and secure all fees from them to be included in closing costs, as well as your desired insurance agent to secure a binder (if you do not have an insurance agent, we would be happy to connect you with an insurance broker to secure the binder for you). They will then finalize the application before submission to a lender, confirming that everything needed is in hand.
• Submit your Application: The team at ACB Mortgage Solutions will take everything we have gathered to date, complete a full mortgage application and provide the necessary documents, such as tax returns, W-2s, pay stubs, and bank statements to the selected lender. The lender will then send you disclosures, a loan estimate, and an "intent to proceed" that you will need to sign off on for the loan to proceed to underwriting.

4. Underwriting:

• Underwriter Review: A mortgage underwriter thoroughly reviews your application and all documentation to assess your ability to repay the loan. They focus on your credit history, capacity to repay, and the property's collateral value (the "three Cs").
• Conditional Approval: If the underwriter approves your loan with conditions, you'll need to provide additional information or documentation before final approval is granted. The team at ACB Mortgage Solutions attempts to anticipate what these conditions may be based on our initial discussions with you, and likely have already asked you for documentation, which will make clearing these conditions smoother and easier for you as we can work to provide updates direct to the lender without needing to worry you with every request. There are always conditions that come up that we may need additional clarification, documentation, or some kind of letter of explanation, and we will communicate that with you and remain your point of contact as we liaise with the underwriters throughout the process.
• Rate Lock: When it comes to rates, every lender is different. If rate was the most important factor to you, when we selected your lender, we would be seeking one with better rates at the time we were submitting your loan. Rates come with something known as "points," which is either a cost or credit to select a particular rate. If you need money towards closing costs, maybe you select a higher rate and get a credit towards closing costs. If you are looking for the lowest rate possible, maybe you are paying extra at closing to buy a lower rate. The lender recommended rate will always be the rate closest to zero-cost (no cost, no credit). It's then up to yu to decide whether you wish to go higher or lower, based on your specific situation. When we submitted the loan, there are two options we have, we could "float" the rate, meaning we select the current rate for calculation purposes but that's not the rate that will be used, or we could "lock" the rate, meaning the rate selected and the points associated are set in stone. Depending on market factors and rate volatility, we may recommend one over the other. However, when it is time to discuss rate, you will have a conversation directly with your licensed Loan Officer who can answer questions and provide you with your options. It is important to note that rates change daily, often multiple times throughout the day, and once a rate changes, unless it is locked, the scenario presented is no longer valid. Sometimes that can be to your benefit or your detriment. Every situation is different and depends on market factors.
• Final Approval: Once all conditions are met, your mortgage loan has what is known as a "Clear to Close," and is approved. Typically in an offer for a purchase, your Realtor will list a "Mortgage Commitment Date," or Contingency, where we would provide a letter confirming that you are indeed able to secure financing to close on the loan, or, if not, be reimbursed for your money. We are seeking and working towards this stage prior to the Commitment Date.

5. Closing:

• Closing Disclosure: You will receive a Closing Disclosure (CD) detailing the final loan terms, monthly payments, and closing costs at least three days before closing. Review this document carefully and ask us any questions you may have.
• Prepare Funds: The Closing Disclosure will let you know how much you need to bring to the close, something you also can verify with us or your Closing Attorney. Have the remaining down payment and closing costs ready, often in the form of a cashier's check or wire transfer.
• Final Walk-Through: You may have the opportunity to do a final walk-through of the property along with your Realtor to ensure it's in the agreed-upon condition.
• Closing Meeting: Attend the closing meeting (usually at a title company or attorney's office) to sign the final documents, pay closing costs, and receive the keys to your new home! 

After Closing:

• Receive Documents: You should receive copies of important documents, including the signed deed and Closing Disclosure.
• Move In and Buy Furniture: Every loan officer will tell you not to do anything before the loan closes that could materialistically change your Pre-Approval. Sometimes easier said than done! But now that you have the keys to your new home, you can begin buying the things you need for your new home and move in.
• First Mortgage Payment: Your first mortgage payment is usually due the first full month after closing. 

This is a general overview, and the specifics of the mortgage process can vary depending on your individual circumstances and the lender we're working with. Whether you're residential or investment would also impact this process.

It is important to remember that there are no rigid rules that apply to every applicant. Each case is evaluated individually. Even if a borrower falls short in one area, strengths in another area may help compensate. Lenders want to issue loans — it's in their interest to help qualified borrowers succeed in obtaining financing.

As always, the team at ACB Mortgage Solutions will be your best guides and trusted partners throughout the process and make sure you always know what you need to do and when and why.

The application is the next step of the loan process. With the aid of a mortgage professional, the borrower completes the application and provides all Requested Documentation.

A loan application is not considered complete until you have given us at least the following information: (1) Your name, (2) Your income, (3) Your Social Security number (and authorization to check your credit), (4) The address of the home you plan to purchase or refinance, (5) An estimate of the home's value and (6) The loan amount you want to borrow.

A Loan Estimate is a three-page form that you receive after applying for a mortgage. The Loan Estimate tells you important details about the loan you have requested. We will deliver this to you with in 3 days of your fully completed loan application. The Loan Estimate provides you with important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. In addition, the Loan Estimate will also indicate if the loan has special features that you will want to be aware of, like penalties for paying off the loan early (a prepayment penalty) or increases to the mortgage loan balance even if payments are made on time (negative amortization). The form uses clear language and is designed to help you better understand the terms of the mortgage loan you’ve applied for. All lenders are required to use the same standard Loan Estimate form. This makes it easier for you to compare mortgage loans so that you can choose the one that is right for you. When you receive a Loan Estimate it does not mean that your loan has been approved or denied. The Loan Estimate shows you what loan terms we can offer you if you decide to move forward.

After you receive your Loan Estimate, it is up to you to decide whether to move forward with us or not. If you decide not to proceed with an application for a particular loan, you don’t need to do anything further. If you do intend to proceed with us, you must take the next step and tell us in writing or by phone that you want to move forward with the application for that loan. All lenders are required to honor the terms of the Loan Estimate for 10 business days. So, if you decide to move forward more than 10 business days after you receive a Loan Estimate, please realize that market conditions may make it necessary to revise the terms and estimated costs and provide you with a revised Loan Estimate.

Once the application has been submitted, the processing of the mortgage begins. The Processor orders the Credit Report, Appraisal and Title Report. The information on the application, such as bank deposits and payment histories, are then verified. Any derogatory credit marks, such as late payments, collections and/or judgments require a written explanation. The processor examines the Appraisal and Title Report checking for property issues that may require further investigation. The entire mortgage package is then put together for submission to the lender.

Once you have completed the loan application, accepted the loan estimate and indicated your intent to proceed we will request documents from you in order to obtain your loan approval. The following statements are not a complete list of what will be needed but are intended to give you some idea of what we will need from you. Once you get to this stage of the loan process, we will give you a specific set of documents that we will need for your particular loan. If you are purchasing or refinancing your home, and you are salaried, you will need to provide the past two-years W-2s and one month of pay-stubs: OR, if you are self-employed you will need to provide the past two-years tax returns. If you own rental property you will need to provide Rental Agreements and the past two-years' tax returns. If you wish to speed up the approval process, you should also provide the past three months' bank, stock and mutual fund account statements. Provide the most recent copies of any stock brokerage or IRA/401k accounts that you might have.

If you are requesting cash-out, you will need a "Use of Proceeds" letter of explanation. Provide a copy of the divorce decree if applicable. If you are not a US citizen, provide a copy of your green card (front and back), or if you are NOT a permanent resident provide your H-1 or L-1 visa.

If you are applying for a Home Equity Loan you will need, in addition to the above documents, to provide a copy of your first mortgage note and deed of trust. These items will normally be found in your mortgage closing documents.

Most people applying for a loan do not need to be overly concerned about the effects of their credit history during the loan process. However, you can be better prepared by obtaining a copy of your credit report before applying. This allows you to identify and correct any negative information in advance.

A credit profile refers to a consumer credit file maintained by the major credit reporting agencies. It reflects how you have handled previous credit accounts and other financial obligations. There are five categories of information typically found in a credit profile:

• Identifying Information
• Employment Information
• Credit Information
• Public Record Information
• Inquiries
• Not included in your credit profile: race, religion, health, driving record, criminal record, political preferences, or income.

If you’ve had credit issues in the past, be prepared to discuss them honestly with your loan officer. A well-written Letter of Explanation can help provide context. Experienced loan professionals understand that credit issues can result from circumstances like illness, job loss, or other hardships. If the issues have been resolved and you’ve shown a pattern of timely payments for at least a year, your credit may still be viewed as satisfactory.

The lending industry has its own terminology when it comes to credit evaluation. Credit grades are determined by factors such as payment history, current debt, bankruptcies, credit scores, and overall credit usage. Credit scoring is a statistical tool used to assess the risk associated with lending. It takes into account:

• Past delinquencies
• Negative payment behaviors
• Current debt levels
• Length of credit history
• Types of credit used
• Number of recent inquiries
  
  

The most commonly used scoring system is the FICO score, developed by Fair, Isaac & Company. It’s used by the three major credit bureaus: Equifax (Beacon), Experian, and TransUnion (Empirica).

FICO scores are repository scores—they are based only on the information in your credit file. They do not factor in your income, savings, or how much you're putting down. The score is calculated as follows:

• 35% – Payment history
• 30% – Amounts owed
• 15% – Length of credit history
• 10% – New credit
• 10% – Types of credit used

While credit scores influence which loan programs may be available to you and how your application is processed, they are not the only factor. Income, assets, documentation, and overall financial profile also matter.

Some lending professionals remain skeptical about the accuracy of credit scores, but over time, they’ve proven effective. FICO scoring has been widely used in consumer lending since the 1950s and was adopted more broadly in loan underwriting starting in the late 1990s.

Here are some effective ways to improve your credit score:

• Pay bills on time
• Keep credit card balances low
• Close unused accounts (don’t just leave them at zero)
• Ensure your credit report is accurate
• Avoid unnecessary credit inquiries

In general, borrowers with a credit score of 680 or above are considered strong candidates. They may qualify for the best rates and fastest processing. Scores between 620 and 679 may trigger more detailed review, though approval is still possible with good supporting documentation. Scores below 620 often place borrowers in the sub-prime category, where loan terms are less favorable and approvals may take more time.

When credit is weak, other loan factors—such as income, assets, job stability, and documentation—carry more weight. Negative events like late payments, bankruptcies, or foreclosures have a stronger impact on your credit grade than minor issues. A pattern of frequent inquiries or many open accounts can also signal risk. Ultimately, your overall financial picture—and your demonstrated willingness to repay—will influence loan approval and terms.

An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.

Using three common approaches, which are all derived from the market, derives the opinion, or estimate of value. The first approach to value is the COST APPROACH. This method derives what it would cost to replace the existing improvements as of the date of the appraisal, less any physical deterioration, functional obsolescence, and economic obsolescence. The second method is the COMPARISON APPROACH, which uses other "bench mark" properties (comps) of similar size, quality and location that have recently sold to determine value. The INCOME APPROACH is used in the appraisal of rental properties and has little use in the valuation of single-family dwellings. This approach provides an objective estimate of what a prudent investor would pay based on the net income the property produces.

Once the processor has put together a complete package with all verifications and documentation, the file is sent to the lender. The underwriter is responsible for determining whether the package is deemed an acceptable loan. If more information is needed, the loan is put into "suspense" and the borrower is contacted to supply more information and/or documentation. If the loan is acceptable as submitted, the loan is put into an "approved" status.

The Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

We are required by law to give you the Closing Disclosure at least three business days before you close on your mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from us. The three days also gives you time to ask us any questions before you go to the closing table.

Once the loan is approved, the file is transferred to the closing and funding department. The funding department notifies the broker and closing attorney of the approval and verifies broker and closing fees. The closing attorney then schedules a time for the borrower to sign the loan documentation.

At the closing the borrower should:

• Bring a cashier's check for your down payment and closing costs if required. Personal checks are normally not accepted and if they are they will delay the closing until the check clears your bank.
• Review the final loan documents. Make sure that the interest rate and loan terms are what you agreed upon. Also, verify that the names and address on the loan documents are accurate.
• Sign the loan documents.
• Bring identification and proof of insurance.

After the documents are signed, the closing attorney returns the documents to the lender who examines them and, if everything is in order, arranges for the funding of the loan. Once the loan has funded, the closing attorney arranges for the mortgage note and deed of trust to be recorded at the county recorder's office.

A typical transaction takes between 14-21 business days to complete. With new automated underwriting, this process speeds up greatly. Contact one of our experienced Loan Officers today to discuss your particular mortgage needs or Apply Online and a Loan Officer will promptly get back to you.