THE REFINANCE MORTGAGE LOAN PROCESS



Initial Application and Review with Your Loan Officer

This is where it all begins. Generally, most people will call a mortgage company, and have an initial conversation with a Loan Officer, give them a telephone application, make an appointment for an office application, or they may complete an initial online application.

 

Whichever way, the Loan officer will gather information about you, your credit, income, assets, and debts. This lets the lender make a financial determination of what a refinance loan may look like for you.  What your savings and new payments might look like, interest rates you qualify for, etc.

 

There are no obligations, and you are not committing yourself to anything when providing your initial application.


Full Application

Assuming the numbers sound good, you give your Loan officer permission to start processing the refinance loan.

 

You will sign all the application paperwork and disclosures for your exact loan program. This includes the Good Faith Estimate (GFE) and Truth-In-Lending (TIL) disclosures.

 

You can physically come to our office, but most people these days elect to do everything online.  From signing your application via Electronic Signatures, Email, or fax.

 

You still will need to supply all of the required supporting documentation for processing your loan, like recent pay stubs, W2's, bank statements, etc.

 

Again, you can drop them off, mail, fax or send them via our secure document upload page.

Processing of your Refinance Application

Upon receipt of your signed application and supporting documentation, the lender will begin processing your application. They start with verifying all the minimum documents are in the file, and then order your appraisal and title company commitment.

 

Next they will submit the application package through the appropriate automated underwriting system (AUS) that will provide the lender with the necessary computerized loan approval.

 

In some cases, your application will fail the automated approval, and will be manually underwritten.  Processing also will review the file to see if the Loan Officer missed anything, and if so, will ask for the items before the file is sent to full underwriting.

 

Underwriting

With everything now in your file, the applications moves to full underwriting. The underwriter's job is to verify everything in the application is true and correct, and to determine if the file meets the loan program guidelines. If more information is needed, you will be contacted to supply more documentation. Getting additional information is very common at this stage, and nothing to be worried about.


If the underwriter approves the loan, the lender issues a conditional commitment to lend, pending any and all conditions are met.


Clear-to-Close

This is when the Underwriting Department has fully approved your application.  Everything has been completed, and there is nothing left to do except schedule the closing date and time, and for the lender to prepare the final documents you will sign at closing. 

 

The lender will send the final loan paperwork, instructions, and wire the money to the title company, who will prepare your final settlement statement showing the exact dollar amount needed to close (if any).  We usually don't have these final numbers until just a few days before your closing.

 

Loan Closing

The closing is where everything comes together. Here in Minnesota, Wisconsin, and South Dakota we typically close mortgage loans with a Title Company. We are known as a "wet" state, which simply means everything is 100% completed when you sign.

 

At the closing, you will sign all your final loan documents, including a promise to pay, and the mortgage, which secures your promise to pay. The title agent will have you sign all the mortgage company paperwork, and disburse the money to pay off the existing lender (refinance).

3-Day Right of Recission

When refinancing, your loan is NOT 100% complete at the signing like it is when you buy the home. Rather, you get three business days AFTER closing to re-evaluate the loan, and back out if you want before it is final.  If for example, you sign on a Monday, you get Tuesday, Wednesday, and Thursday to back out. If you don't, your loan becomes official on Friday. This provision doesn't get used often these days.  It is a hold over rule from years past when unscrupulous lenders promised one thing, then at closing it was different.  New rules and regulation make that sort of game virtually impossible to play today - and that is good news for everyone.



 

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