The strongest tool your Realtor can have when negotiating a Contract on your behalf is a "CLA," Conditional Loan Approval. This means that you have been to the lender, submitted documents, obtained a credit approval, been submitted to underwriting and, subject to certain conditions and terms, have been approved for a loan. Terms and conditions can be anything from supplying a few additional papers or simply finding "the home" and obtaining an appraisal.

Loan Application

This will take about an hour of your time. It should be done in person with the lender. They will explain the loans available to you so that you can make an informed decision about the type of loan that you will obtain. Some of the documents required for a standard loan are; bank statements (where your money is coming from), pay stubs, tax returns, lists of debts (loans and credit card balances and minimum payments), etc. The cost of a credit report is approximately $17.00 and is paid for when you make your loan application.

Loan Process

All the documents are sent to the Loan Processor who puts everything in order and checks to make sure all the required information is together. The package is then submitted to the underwriter.

Underwriting Process

The underwriter is the person trained to look at the entire package and determine if all the rules and guidelines for the loan that is being submitted have been met. If everything is in order the loan is approved, and loan papers can be drawn. If something is missing, the loan officer is notified of further information or explanations that are required. The loan has to be approved by underwriting before it can proceed.

Closing Department

The loan documents are prepared and submitted to the Title Company. The Title Company then prepares the Closing Statement or HUD Statement, which identifies the costs for the buyer(s) and seller(s).

Closing costs may vary. Lenders and the different loans obtained will have very different costs associated with them. Therefore, lenders issue what is called a "Good Faith Estimate" at the time of or shortly after the application, so the buyer will have a good idea of the amount of money necessary to close.

Closing and Funding

Closing, or signing the documents, is usually done at the Title Company. (Not a necessity, but certainly a convenience). Cashier funds are required from the buyer(s) for the remaining monies required, (not already in escrow) according to the contract.

The loan is considered "funded" when all the documents are signed, approved by the lender and the money released to the Title Company for disbursement upon recordation.