Pre-Approval
First things first, you need to understand that a pre-qualification and a pre-approval are NOT the same thing. A pre-qualification is based off of unverified information and is a rough estimate of what you could qualify for. A pre-approval requires a credit check and financial and employment verification, which provides a more solid approvable loan amount. Once you know this, you can start shopping for your dream home at the Lake of the Ozarks!
Processing
You have found the home of your dreams, worked out an agreement and the contract has been signed. Once your Lake of the Ozarks mortgage lender has the completed purchase agreement, they will begin processing your loan application for approval. They'll look into your credit, employment, and financial history in more detail to come up with a loan estimate. This is not an approval or denial, but a statement of terms and estimated fees.
Loan processors will also look into property information. An inspection and/or appraisal will be ordered to determine that the value of the property covers the loan request amount. If it's determined that the value of the property doesn't meet or exceeds the requested loan amount, the loan may be denied. This doesn't necessarily mean that the deal falls through though, it just means that the purchase contract may need to be revised if all parties agree to move forward.
A title search will also be ordered to make sure there aren't any outstanding liens or judgements on the property that may hinder the underwriting process. This process also brings to light any easements or encroachments that may pose potential ownership issues in the future. The data collected during a title search helps to reduce risk of title problems and brings peace of mind to the buyer.
Underwriting
This is the decision-making step. The underwriter reviews all documentation from the loan processor to make sure the borrower and property match eligibility requirements. All information is double checked for accuracy and red flags. Once they've thoroughly gone through everything, they will either approve or deny the loan. The underwriter may give an approval with conditions such as requiring further documentation on a specific item on your credit report. This happens often and can continue to come up until all conditions are satisfied. Once all conditions have been met, the underwriter can approve the loan.
Closing
Your loan is approved! Now the lender will provide you with a closing disclosure to review and return completed at least three days prior to closing. This document is extremely important because it is an overview of the monetary aspects of the closing, so review it carefully! Once the lender receives this back, they can begin processing the loan documents to be sent to the escrow company for your completion. The escrow company then sends the closing packet back to the lender for final review. Once the lender approves the documents, they will wire funds and give instruction for recording the vesting deed and deed of trust. It's official - you've closed!
A lot of these steps go unseen by the buyer until something is needed by the lender or underwriter, but we feel that it is important for buyers to understand the process so they are prepared. While we hope that all closings go smooth and have very few catches, we know that things happen and there are no guarantees. You can trust that we will guide you in the right direction for all of your Lake of the Ozarks home financing needs.
For Lake area news, resources and tips on financial services, please
Michael Lasson
Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
Direct: (573) 746-7211
Cell: (573) 216-7258
Fax:(866) 397-0318
Email: mlasson@fsbfinancial.com
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.
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