The Loan Process

Before we getting too deep into the loan process, it’s a healthy practice to know how much "home" is going to work within your budget.

We know that finding a home is an exciting time, however, having a loan that exceeds your circumstances is not quite as thrilling. Keep in mind that you are making these payments month after month, for years to come--that's no small feat! Trust us, you will be so glad you took this step early.

While it’s good to have a maximum purchase price, it's better to know your maximum monthly payment. There are multiple factors that affect what goes into your mortgage payment.

So first, find a manageable monthly payment & work backwards. You can use our mortgage payment calculator or check out our FAQ for additional information.

Once you’ve determined your own budget, this is the time to reach out to JR McDonald at Circadian MB. By submitting your financial information, you are taking the first step towards pre-approval—for your benefit, make sure to do this before you start submitting offers on houses. 

There are two reasons this is the best choice for you:

• To know how much you can borrow
• To have a stronger offer while house hunting

During the pre-approval process, you will see just how much cash you are able to borrow from a lender. This is almost always based on your credit score, your income, and how much you are putting towards the property itself through your down payment. The higher these numbers are, the bigger the loan amount can be.

By being pre-approved, your offer will be much stronger since sellers & their agents know that you can be taken seriously. By putting proof into the hands of the sellers, you are communicating that you are ready to purchase their property.

Note that getting pre-approved is different from getting pre-qualified. To dive deeper into this, check out our FAQ.

This step is typically the most exciting part of the process—and should be! Talk to your real estate agent to help you navigate house hunting & negotiations.

If you don’t have an agent yet, no worries, feel free to let us know! We have plenty of recommendations!

After getting an offer accepted, your agent will be able to help you structure the purchase contract & you can make your earnest money deposit. This is a cash deposit to make your offer more attractive to sellers as it reflect how serious of a buyer you are.

Speak with your agent ahead of time about how large the deposit should be; typically, 3% of the purchase price. Be ready to write a check when you make your offer, especially if you’re purchasing in a competitive market.

Now that you have been pre-approved & had your offer accepted, it’s time to lock in an interest rate.

Timing is everything in this critical step of the loan process. Not only will the interest rate determine your payments for (potentially) the next 15 to 30 years, but we are now on the clock to satisfy any contingency periods stated in your purchase contract.

Typical contingencies are:

1. Property inspection contingency
2. Appraisal contingency
3. Loan approval contingency

Regarding interest rates, check out our FAQ for more information.

Now that you have secured your rate, we want (& need) to secure the value of your home. We do this through two avenues: an inspection & an appraisal.

We won’t go into too much detail about the differences between inspections and appraisals, you should know that both cost money.

The typical inspection will be about $300 to $500, while an appraisal will run you about $500 to $750. You will notice this is a range of prices. Both processes are based on the size & value of the home. For more information, check out our FAQ.

While this process can be a headache, this is ultimately a good thing as it benefits every party. By determining the value of the property by a neutral 3rd party, you can breathe easy knowing you are paying a fair value for your home & the lenders feel confident lending you the money for it.

For you, the buyer, this is mostly a waiting period for the underwriting and the appraisal to be completed; but be prepared!

Once your loan is submitted to underwriting, Lenders will send back a checklist of conditions that need to be met before they fund your loan.

For some of those conditions we, the brokers, can take care of on our own. Other conditions will require your help.

These conditions can be a wide variety of things, so it’s hard to fully predict all of them. A few common examples are obtaining:

• Recent paystubs, or bank statements
• A written explanation of credit issues like late/missing payments, or the existence of collection/judgments accounts
• Additional tax or income information

Being meticulous at times is part of the loan process. This careful approach helps avoid potential delays while simultaneously providing timely communication with the Lender. While this may feel slow, this is actually providing steady pacing to ensure smooth & quick delivery of loan documents. Slow is smooth; smooth is fast!

During this stage, we will do most of the heavy lifting, but your timely response to lender requests will go a long way in making the underwriting process smoothly!

After fulfilling all of the lender's conditions, we’ve made it to the big day: signing loan documents.

By this time, the lender has sent over a hefty stack of papers known as closing documents.

Be prepared to do a good amount of signing (it will be well worth it)!

Within the closing documents, you will find one crucial document: the Closing Disclosure. This document discloses the final costs associated with your loan before it finally closes. These closing costs should look familiar, as you should have seen very similar costs disclosed in your Loan Estimate.

The Loan Estimate is exactly what it sounds like—an estimate of what the loan will cost. While the Closing Disclosure may differ slightly, the two documents should be pretty close since laws prohibit them from being too far off.

After confirming everything looks accurate, a Notary will be with you as you sign to complete this final step! the final costs associated with your loan  it finally 

After signing the loan documents the notary will take the documents back to Escrow so they can separate the documents that go to the lender & those that go to the county recorder.

Once the lender receives the signed documents a funder is assigned to your file to make sure that all documents have been executed. After they dot their I’s & cross their T’s, the funder funds your loan!

Meanwhile, the county is preparing your Deed after they receive their respective documents from Escrow. For properties purchased in Los Angeles County, it is normal for the funding to occur one day prior to the recording of the Deed.

Once we receive confirmation of the recording, you are all set! Congratulations! You’ve made it through the entire loan process. You can get your keys & move into your new home!