After Closing

Congratulations on closing on your new home! After your loan is funded and you start moving some things may change, read about mortgage processing and servicing below.

Mortgage Processing, What it Means and Why it Matters

When buying a home, your loan application goes through several distinct stages.  With today’s red-hot housing market, the timing of each stage can affect your ability to bid on a specific home, so it pays to understand processing time for each stage, and how you can help expedite the process. The typical home mortgage takes between 30 and 45 days to complete, but the ultimate question, of course, is how long will it take for YOUR mortgage to be approved? The answer: it depends on several points, including how much verification the processor (the person who actually processes your loan) is required to do on each part of your application, whether you’ll need to provide more information to support your application, how fast you provide the needed information and other factors that can vary tremendously. We must stress the importance of getting documentation to your loan specialist quickly in order to be approved for a mortgage. Providing the documentation as soon as possible to your loan specialist sets the loan up for success, as mortgage loans are a process and every document provided could potentially reveal a new item that needs to be documented. 

Beyond slow turnaround time with your documentation, the complexity of your financial situation may also determine how long your loan could take to get approved. That’s why it’s best to start the mortgage application process as soon as possible to ensure that the application process is one less item that you have to do when you find your new home. You don't have to wait until you find the perfect property before you begin the mortgage process – as we talked about in our previous post, getting a pre-approval can greatly facilitate your home buying process!

Here are a few points that can affect your loan’s processing time, along with some actions you can take to help, if needed:
 

Verification

In this step, the processor will follow up and verify the information you supplied in the application process.  Income, credit history, employment history, and bank statements are confirmed and verified, and any questions that come up in this process must be explained to the underwriter’s satisfaction.  Although you may not have much control over the verification of most of these items, you should ensure all documents you provide to the lender are submitted in a timely fashion, and are as detailed and accurate as possible.
 

Review

One of the most important factors in the mortgage approval process is your credit history. The underwriter will review your credit report to see how well you made payments on, or paid off car loans, student loans and other lines of credit.

The underwriter will then review your employment history, income, debt and assets. They’ll look at your savings, checking, 401k and IRA accounts, tax returns and other records of income, as well as your debt-to-income ratio. The lender looks for indicators to help them predict your ability to pay back what you borrow.  They want to see that you, and any co-borrowers, have the ability to make the payments both now and in the future.
 

Home Inspection

The borrower will often order a home inspection, which is a visual evaluation of a home's features and overall condition. This on-site evaluation, completed by a licensed inspector, checks the performance of the home's roof, driveway, foundation, framing, and the general condition of windows, doors, floors, ceilings, and walls. 

Appraisal

The processor will order a home appraisal to determine the value of the property (if required) to verify that the home’s overall value meets the requirements of the particular type of loan you’re requesting.

What Now?

Once your loan goes to underwriting, your UHCU Loan Specialist will stay in touch with you throughout the loan process. Prompt responses to any requests from your Loan Specialist will shorten the underwriting time as much as possible. Once any questions are resolved, the loan can move to final approval.

If you have any questions or concerns, reach out to your UHCU Loan Specialist – we’ll be with you every step of the way!



 

 

 

What Does Servicing My Loan Mean?

When you start drilling down into the world of real estate mortgage loans, as you’ve no doubt already noticed, you’ll discover a new world of terms and acronyms that seem designed to confuse you!  We’ll break down the differences and similarities between lenders and mortgage loan servicers, and provide some tips from experienced buyers to help you navigate the mortgage landscape.

Mortgage Lenders – What Do They Do?

When you apply for a mortgage loan, the credit union, bank, or other institution that actually extends a loan to you is called the lender.  The lender is responsible for processing your application including researching your credit and employment history, and the lender’s underwriter ultimately makes the decision based on rules regarding the terms you’ll be offered. In some instances a mortgage broker, who helps connect borrowers to lenders, may assist in processing your application.

Mortgage Servicing

Once the mortgage and home purchase are complete, the administrative handling of the mortgage is called servicing.   The servicer is the company that manages your loan account. In some cases, the loan owner/lender is also the servicer. Other times, the owner sells the right to service the loan to another company. This sale is called a transfer of servicing rights. Some lending institutions, like credit unions and mortgage banks, will hold and service the mortgages that they offered; other lenders may transfer the mortgage to a servicer. Selling a mortgage to a servicer is normal and should not affect your decision regarding which lender to use. Ordinarily, the deal you can get on the loan itself is far more important than the entity that will service your loan. Under regular circumstances, your interaction with the servicer will be minimal, and it’s not unusual for a mortgage to be transferred to more than one servicer over the life of the loan.

What Does a Servicer Do?

The servicer’s primary job is to handle payment processing, escrow for insurance and taxes and other administrative tasks.  If you are selling a home, the servicer accepts the payoff and releases the lien. Also, if you run into financial difficulties, the servicer handles borrower services such as temporary forbearance or other relief.  In 2020, servicers offered several COVID-19 pandemic related relief programs.  For questions or access to similar programs, your loan servicer is your primary point of contact.

What’s The Bottom Line?

If your mortgage is transferred to a new servicer, the terms won’t change, but read the first mortgage statement you receive from your new lender carefully to verify that all the information it lists is true and accurate.  If there are any errors, contact the servicer right away – they will work with you to iron out any differences that you might see from your original loan contract.  Remember, your original contract is still binding; the new servicer must honor the terms of the loan as it was signed.  At the end of the day, a change of servicer shouldn’t be any issue for you, the borrower.  If you have any questions about this, or any other mortgage related issue, call your United Heritage Loan Specialist. We’ll be by your side every step of the way!