Purchasing a home is generally a long and stressful exercise that involves many steps and procedural formalities. Closing occurs when the borrower signs the papers that make the house theirs, but before that fateful day arrives, a long list of things has to happen in a certain order.
The mortgage process can be tedious, but the key to a smooth and timely closing is the prompt submission of all necessary documentation. In other words, a lender is only as good as the information they have in front of them.
Before a mortgage loan officer can move forward to start the mortgage process and draw a loan application package for a borrower to e-sign, they need to receive three things from third parties who are also involved with the transaction:
- Escrow Fees
- Escrow Instruction and Documentation
- Title Reports
Escrow fees are a portion of the closing costs that come with buying a home. These costs are paid directly to an escrow company or title company to conduct the closing and distribute funds to the third parties involved in the real estate transaction.
Escrow instructions are written instructions provided by the escrow company/holder outlining the terms and conditions of all parties involved for a specific transaction.These instructions outline what must be done in order to close a transaction and have the escrow agent disburse assets, documents, funds, etc.Both the buyer and seller must sign the escrow instructions and complete their respective conditions in order to finalize the transaction.
Title reports provide the documented history or legal status of a piece of real estate. They are broken up into three sections: Schedules A, B, and C. Schedule A gives an overview of the title search, title policies to be issued, who the current owner is (sometimes also a ownership history) and the type of property. Schedule B will list any liens on the property as well as any restrictions or easements that may be in place. This includes items that will be paid off along with items that will continue on after the transfer of ownership such as CC & Rs and property taxes.
It is important to note that the property taxes may be reassessed if you are purchasing the property. Schedule C lists the legal description of the property and includes the assessor parcel number.
In order for a lender to be able to move forward with the loan application and ultimately the loan process, they must have all fees and documents from escrow and title. Once these are provided to the lender, they can draw up a loan application package for the borrower to sign.
When this is electronically signed, the lender can send the loan to underwriting and immediately order an appraisal for the home. The appraisal is typically ordered immediately after the loan application has been e-signed.
It’s important to note that national holidays also affect the loan process timeline. For example, if your offer is accepted at the end of the day before a holiday weekend, the loan process will likely take longer as offices will be closed until the following Monday. We are all at the liberty of the timeline, so it is important to get documents submitted promptly in the order they are requested so as to keep the pace of a smooth transaction.
If you have any questions regarding the sequence of documents required for the mortgage process, please feel free to reach out to our office at (760) 930-0569 and one of our loan originators will be happy to assist you.