Joe 's Blog


How Purchase Loans Are Made - A Step-By-Step Walkthrough



Joe Gonzalez
Branch Manager
1st Metropolitan Mortgage
Phone: 610-351-7510
Fax: 610-351-7810

1.   Pre-approval - Get pre-approved for a mortgage and know in advance exactly how much house you can afford. Completing this step will also increase your negotiating power since you'll be viewed as a "cash buyer".
2.   Loan Search - Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and in the future.
3.   Loan Application - It's crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.
4.   Documentation - Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years' tax returns, and account statements verifying the source of the down payment, funds to close and reserves.
5.   The Hunt - Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought.
6.   Appraisal - Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying.
7.   Title Search - This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.
8.   Termite Inspection - While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary.
9.   Processor's Review - All pertinent information will be packaged by your mortgage professional and sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.
10.   Underwriter's Review - Based on the information put together by the loan professional, the underwriter makes the final decision regarding whether a loan is approved.
11.   Mortgage Insurance - Many lenders require private mortgage insurance when borrowers put down less than 20 percent on a loan.
12.   Approval, Denial or Counter Offer - In order to approve a loan, the lender may ask the borrowers to put more money down to improve the debt-to-income ratio. The borrower may also need a bigger down payment if the property appraises for less than the purchase price.
13.   Insurance - Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In California, some lenders require earthquake insurance on condominiums.
14.   Signing - During this step, final loan and escrow documents are signed.
15.   Funding - At this point, the lender will send a wire or check for the amount of the loan to the title company.
16.   Confirmation of Funding - The lender authorizes the disbursement of loan proceeds.
17.   Closing - Documents transferring title will now be officially recorded by the County Recorder.
18.   Congratulations, you are now a homeowner!

If you'd like to learn more, please give me a call. I'd be happy to speak with you!

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Joe Gonzalez
1st Metropolitan Mortgage
1030 W. Hamilton Street Front Office
Allentown, PA 18101

© Copyright 2008. All About News, Inc.

For help or questions contact:

Joe Gonzalez

Senior Loan Consultant -  NMLS #126036
GMH Mortgage Services, LLC
625 W. Ridge Pike, Building C, Suite 100 | Conshohocken, PA  19428 | Direct: 610-355-8039 |  Cell: 610-739-6563

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Comment balloon 4 commentsJoe Gonzalez • July 18 2008 12:38PM


Joe -

That about sums it up - thanks for the detailed primer!


Posted by Dean Moss, Dean's Team Chicago IL Real Estate Team (Dean's Team - Keller Williams Realty Partners Chicago IL) almost 12 years ago

Joe, did you send this out to your database?  I was wondering what kind of a response that you received from it.  Thanks, and keep rockin' ActiveRain.

Posted by Jason Roebuck almost 12 years ago

Dean - Glad you enjoyed the run down

Jason - I have not sent it to the entire database.  Just clients who request information about purchasing.

Posted by Joe Gonzalez, NMLS# 126036 (610) 739-6563 (CrossCountry Mortgage, LLC NMLS #3029) almost 12 years ago

Joe, that is a nice run-down of what a buyer can expect throughout the process.  Very concise and to the point !!   Hopefully number 12 does not change the terms too much.  That is one of my pet peeves.  As long as all the information that was provided in the beginning of the process was correct by the purchasor there should be no change in terms of the loan unless the guidelines change dramatically.

Chris Somers

Posted by The Somers Team, Delivering Real Estate Happiness (The Somers Team at KW Philadelphia) almost 12 years ago