A Typical Loan Transaction

A standard, residential purchase transaction will resemble some version of the diagram to your right. The transparent tasks on the left represent the real estate stuff that happens in parallel. Let’s look at the pieces.

For refinances, see the Refinancing.

For unique loan programs, commercial property purchases, or other unconventional processes, see Under Construction.

Pre-Approval

1) Brief Consultation: The first step in any transaction—purchase or refi—is speaking to a lender. During this call I’ll familiarize myself with your goals, determine your limits, and come up with a plan together.

2) Complete a Loan Application: If we determine it’s a good idea to fill out a loan application—a mandatory step for all loan shapes and sizes—I’ll email you a link to my online app (takes ~15-30min). If we’re not quite ready to secure a loan, we’ll come up with a plan to get you where you want to go.

3) Initial Docs to Loan Officer: After your loan app is complete, you’ll receive an initial “needs list” from me via email. Everyone’s scenario is unique, but there are several common ones to expect. For purchases, the objective of all of this is to receive a pre-approval. The PA is a critical. No offers you make will be taken seriously without one.

Submission to Underwriting

4) Submission/Initial Disclosures: Once step #3 is complete, you’re in a holding pattern until escrow opens. This occurs after an offer has been accepted OR—in the case of a refi—whenever is convenient. Several loan-related tasks will happen on the back-end, culminating in a link sent to you via email to e-sign “initial disclosures”. This package is also where you’ll find your first loan estimate. After signing, your loan will be officially submitted to the bank’s underwriting team.

5) Appraisal & Insurance: At the same time of submission to UW, two other parallel processes will begin: Appraisal & Securing of Insurance. Unless our gameplan calls for different timing, you can expect a link for payment in your inbox within a few hours of submission. The appraisal process will not begin until it has been paid for. Lastly, you’ll want to begin shopping for & securing insurance as soon as is feasible. HOI gets tougher and more expensive each year, so getting a head start is important.

6) Receive Conditional Approval: The objective of all of the above is to receive “Conditional Approval”. This milestone means the UWs have reviewed our scenario, discussed those details w/ me, and has committed to funding us as long as we provide them with the final docs they need. We refer to these final docs as “conditions”.

Clearing Conditions

7) Conditions: The conditional approval letter will include a list of conditions the lender needs in order to give our loan final approval. This phase is all about collecting &clearing those conditions. In a normal loan, this is often where a doomed file will fall apart, as issues overlooked or ignored will inevitably manifest as a box UWs are required to check. See conditions page for more details.

8) Finalize Appraisal & Insurance: Two of these primary conditions will be a “passing” appraisal report & finalized insurance policies. Timelines can vary based on location, bank, and property type, but they should all come together around the time UW is reviewing the other conditions we’ve collected and resubmitted.

9) Final Approval: After UW has cleared all conditions, we’ll receive “clear-to-close” (aka Final Approval). This verdict marks the completion of the UW phase and means we can begin closing procedures.

*Important Note - Closing Disclosure: In a normal loan, you’ll be issued a closing disclosure around this time. It must be signed is at least 3 business days before you plan to sign loan docs- ideally long before then. See dedicated page for more details.

Closing Procedures

10) Balancing: Once the CD has been signed AND we’ve received final approval, we can begin balancing with escrow. Then draft loan docs and send to escrow.

11) Signing & Final Wire: Loan docs will have to be notarized, so you’ll either come into the escrow office OR a traveling notary will be sent to you. After signing, you’ll wire the final cash-to-close figure to escrow’s account. At this point, you’re done with all your tasks!

12) Funding & Recording: Once your funds land in the account, the bank will wire their portion. When all the money is there, escrow will certify everything and send the closing package to the county’s recording office. When the county notifies escrow of successful recording, the transaction is officially closed.

Outline Idea #2

Once an offer has been accepted and escrow has been opened, we’ll discuss your rate lock preferences via call or text, and I’ll submit your file (aka loan app, initial docs, and a couple other items) to the underwriting team. After that, your only loan responsibilities are to e-sign the docs, ensure pmt is made for the appraisal, and be ready to connect w/ an insurance agent for HOI.

Underwriting

This is the 2-5 business day period between submission and the UW team’s preliminary results.

The objective here is receiving “Conditional Approval”. It means the UWs have reviewed our scenario, discussed those details w/ me, and has committed to funding us as long as we provide them with the final docs they need. We refer to these docs as “conditions”, and this letter generally represents the halfway point of the process.

Final Approval & Closing Disclosure

Final approval, also known as “Clear-to-Close” or “CTC”, is the UW team’s final sign-off and firm commitment to providing you the loan. This is less of a ‘phase’ and more of a milestone.

Registration & Submission

This part’s quick & easy. As long as I’m all squared away w/ docs, your responsibilities can take as little as 5-10min. The bulk of your focus should be on your real estate tasks.

Client’s Primary Tasks:

  • Initial Docs Uploaded to AJ

  • Determine Rate Lock Plan

  • Review & e-sign first Loan Estimate & Initial Disclosures emailed to all borrowers.

  • Appraisal is ordered and pmt is made via credit card on file or a link sent via email.

  • Begin Shopping for Homeowners Insurance

  • Real Estate Tasks in parallel include:

    • Scheduling & Conducting Physical Inspection

    • Depositing your EMD.

    • Completing Escrow Instructions.

Client’s Primary Tasks:

  • Wait..

  • If rate is still floating AND you haven’t left locking to me, keep an eye on rates.

  • Focus on real estate tasks (e.g. inspection(s), negotiations, etc)

  • Continue coordinating and/or shopping Homeowners Insurance

  • Real Estate Tasks in parallel include:

    • Conducting Physical Inspection

    • If applicable, Repair Requests.

    • Completing Escrow Instructions

    • Removing Inspecton Contingency (CA); Allowing Option Period to Expire (TX)

Client’s Primary Tasks:

  • Conditions:

    • Docs: Gather the list of docs the UWs have asked for.

    • UW Explanations: Explain and/or document issues the underwriting team may have flagged..

    • HOI: Receive “Declarations Page(s)" for the subject property. Fwd to me if I’m not already involved.

    • Appraisal: Receive passing appraisal report (happens automatically)

  • Rate Lock: If it isn’t already, rate needs to be locked asap.

  • CD: If possible, review & acknowledge your initial Closing Disclosure.

  • Real Estate Tasks in parallel include:

    • Removing Inspecton Contingency (CA); Allowing Option Period to Expire (TX)

    • Conduct follow-up Inspections (e.g. plumbing, foundation, etc), if applicable.

    • Termite work, if applicable

    • Conduct & Receive Survey

Client’s Primary Tasks:

  • Remaining Conditions: If more conditions are required, round those up.

  • Appraisal & HOI: Ensure appraisal has been cleared (aka completed & removed as condition) and appropriate Declarations Page(s) have been received.

  • CD: E-sign/acknowledge the Closing Disclosure

Conditions

This is the phase where things are most likely to get bumpy. If there was something I’d been mentioning could be a risk, this is the part where it will matter. Conditions are unique to each person’s file. There can be as few as 2, but probably 3-7 on average.

Closing Procedures

Once we have final approval the rest is smooth sailing. Here's what happens next (blue tasks involve your participation. The rest is for context.):

  • Balancing: Loan docs are drafted & escrow makes sure the bank's numbers match their own (this is called "balancing"). If there are discrepancies, the bank will adjust their numbers to match escrow.

  • Docs to Escrow: Once escrow confirms everything is correct, loan docs are sent to them and printed out.

  • Scheduling: Escrow calls you to schedule the signing. This is most commonly a traveling notary that comes to you at the time and place of your choosing (e.g. your home at 8p, Starbucks at 11a)

    • Idyllwild note: Turnaround, overnight shipping, and logistics in general are wonky in Idyllwild. We've got plenty of time to account for delays, but make sure you ask Sue/Joann/Mary when and where is best to sign to ensure an on-time closing.

  • Doc Signing: Sign docs in the presence of a notary. Takes 15-30 minutes. I'm always available during signings should you have any questions during your appt :)

  • Wire Remaining Funds: After successfully notarizing docs, head to your bank or online portal to wire your remaining "cash-to-close" funds!

  • Funding: Once escrow receives your wire, they'll notify the bank who then wires the loan amt. Once your funds and the bank's loan are in escrow's account, we are officially "funded".

  • Closing/Recording: Escrow sends your signed closing docs to the bank and county recording office. Once the recording office has recorded the ownership transfer in the public records, you have officially closed!!!

  • Keys: Your Realtor will coordinate all keys (and, if applicable, misc remotes, permits, etc) transfers around the time of recording.