A Typical Loan Transaction

A standard, residential purchase transaction will resemble some version of the following diagram. The transparent tasks on the left represent the real estate stuff that happens in parallel.

For refinances, see the Refinancing page.

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

Pre-Approval

Synopsis: Preparation & shopping. Ensuring Realtor & Lender have what they need first, THEN go shopping.

Appx Time: 5min - 3 Days (“unmotivated” buyers can spend upwards of 1-2yrs).

Objective(s): Accepted Offer and/or Opening of Escrow

1) Brief Consultation: The first step in any transaction—purchase or refi—is speaking to a lender. During this call we’ll go over your goals, determine your limits, and come up with plans.

2) Complete Loan App: 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 my online app (takes ~15-30min). If we’re not quite ready to secure financing, 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 so ‘needs’ vary, but there are several common ones to expect. In a purchase, the objective of all of this is to receive a pre-approval. The PA is a critical, as no offers you make will be taken seriously without one.

Client’s Primary Tasks:

  • Intake & Application: Huddle up w/ AJ, determine goals/strategies, and complete the federal loan application.

  • Upload Docs: Initial Docs uploaded to AJ

  • Shopping: Once pre-approved, you can begin shopping & making offers!

  • Real Estate Tasks in parallel include:

    • Shopping in earnest.

    • Offers & Negotiations.

Underwriting Part 1: Initial Review

Synopsis: Quick & easy. Complete e-signing and appraisal pmt sent via email, and briefly discuss rate & insurance w/ me. These responsibilities take 5-10min. Bulk of your focus should be on your Real Estate & Escrow tasks.

Appx Time: 3-5 Business Days

Objective(s): Conditional Approval

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 a refi—whenever is convenient. Several tasks happen on the back-end, culminating in a link sent via email to e-sign “initial disclosures”. This is where you’ll find your first loan estimate. Once signed, your loan will be officially submitted to the bank’s underwriting team.

5) Appraisal & Insurance: Around this same time, two other parallel processes begin: Appraisal & Securing of Insurance. Expect a link via email to pay for the appraisal within a few hours of submission. Appraisal scheduling won’t begin until it’s been paid for. Lastly, you’ll want to begin shopping insurance as soon as is feasible. HOI gets tougher & 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”.

Client’s Primary Tasks:

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

  • Rate Lock: Determine Rate Lock Plan

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

  • Shop HOI: Begin Shopping for Homeowners Insurance

  • Real Estate Tasks in parallel include:

    • Scheduling & Conducting Physical Inspection

    • Depositing your EMD.

    • Completing Escrow Instructions.

Underwriting Part 2: Clearing Conditions

Synopsis: The phase where things are most likely to get bumpy. Prove our ability to repay, alleviate bank concerns, and finalize both insurance & appraisal.

Appx Time: 3-7 Business Days

Objective(s): Final Approval/’CTC’

7) Gather 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.

Client’s Primary Tasks:

  • Gather Conditions: Collect all the things the bank wants to see and/or review for approval, including but not limited to:

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

    • Explanations: Explain and/or document issues the underwriting team may have flagged. *Most written explanations will need to be signed & dated.

    • 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, if applicable

Closing Procedures

Synopsis: It’s typically smooth sailing from here. Wait for escrow’s call to schedule your signings, notarize the closing docs, send any remaining funds to the escrow acct, and pickup your keys!

Appx Time: 5-10 Business Days

Objective(s): Funding

10) Closing Disclosure

  • If CD hasn’t been acknowledged yet, that’s priority #1. See the Closing Disclosure page for more details.

11) Balancing & Delivery

  • 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)

12) Signing & Wiring

  • 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!

14) Closing!

  • 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.

Client’s Primary Tasks:

  • Schedule Doc Signing: Title/Escrow will call to schedule your physical appt to sign the closing packages. Most often takes place in the title/escrow office or in the presence of a notary.

  • Sign Docs: Sign & notarize the loan and closing docs.

  • Wire Remaining Funds: Wire your closing funds.

  • Real Estate Tasks in parallel include:

    • Final Walkthrough/Verification of Property

    • Pickup Keys