After the loan application is completed, we must verify and confirm all the information provided. This is an intense evaluation process and generally takes from four to six weeks to complete.

Once the loan application has been submitted, THE WAIT begins. It can take up to six weeks for you to receive final loan approval. During the wait between application and approval, it is common for buyers to be apprehensive. However, "NO NEWS IS GOOD NEWS". If the loan processor has a problem or needs additional information, you will be contacted by telephone or mail for this information. If working with a housing counselor have him/her occasionally check with us on how things are going. However, don’t make a habit of calling the loan officer or loan processor too often. It will only cause delays.

During the loan processing phase, we are confirming and verifying the information provided. For example, the Verification of Employment and Verifications of Deposit are sent out, the appraisal and your credit report are ordered, your application and supporting documentation are reviewed. As we receive confirmation of the information you provided, loan processing is continued.

Property Appraisal – The purpose of the appraisal is to provide us with written documentation of the value of the house. We will order the appraisal after the loan application is completed. We will then use the appraisal to determine the loan-to-value ratio. If the value is not sufficient to obtain the requested loan amount, you may 1) renegotiate the price of the house with the seller, 2) make an additional down payment, or 3) decide not to buy the house. The seller can dispute the appraised value or request a review of the appraisal by the lender. We will also use the appraisal to compute the loan-to-value (LTV) ratio by dividing the loan amount by the appraised value.

Monthly Income – Monthly income refers to the "Gross" amount of income you receive monthly. If you are paid an annual salary, it’s that salary divided by 12 months. For example, if your annual salary is $36,000.00 a year, your monthly income is $3,000.00 ($36,000.00 divided by 12 months). If you are paid on an hourly basis and work 40 hours a week, your gross monthly income is computed by multiplying your hourly rate by 2080 hours and then dividing by 12 months. For example, if your hourly rate is $10.00 an hour, your monthly gross income would equal $10 X 2080 divided by 12 = $1,733.33. We will use your gross monthly income to determine whether you have sufficient income to support the mortgage payments.

Loan Limits & Terms – The maximum amount of money that can be borrowed to purchase a home will vary depending on the mortgage product and loan limits established for the area. Because of these variances, you should ask the real estate agent or us about the maximum loan amount for your area. It should also be noted that each borrower is expected to make a minimal down payment. The term on a mortgage simply refers to the number of years that you have opted to repay the debt, i.e. 15 years, 20 years,30 years. The mortgage term will greatly impact the monthly mortgage payment.

PITI – Is a phrase used in the mortgage industry that refers to four components of a monthly mortgage payment.

P – refers to the principal portion of your payment. I – refers to the interest portion of your payment. T – refers to the property taxes portion of the payment. I – refers to the insurance portion of your payment.

The PITI is used by the lender to determine whether you can afford the mortgage. It is used to compute the housing expense to income ratio. The taxed and insurance amounts paid monthly are placed in an escrow account and the lender will pay the real estate taxes and insurance premiums from that account as they become due.

Qualifying Ratios – As part of the qualifying process, we will use ratio calculations to determine whether you have adequate stable income to support the monthly mortgage payments. These calculations are often referred to as debt-to-income ratios. There are two ratio calculations performed by the lender: one to determine the housing debt to income debt ratio and the total monthly debt to income ratio. To demonstrate adequate monthly income to support the mortgage payment, qualifying top/front ratios (housing to income) will range from a maximum of 28% to 31% (other programs with higher ratios are available). To demonstrate your ability to pay your mortgage and other recurring monthly obligations, qualifying bottom/back ratios (total debt to income) will range from a maximum of 38% to 43% (other programs with higher ratios are available).

To compute the housing expense ratio (top/front), we will divide the PITI by the gross monthly income. To compute the total monthly debt ratio (bottom/back) we will divide the total monthly debt including the PITI by your gross monthly income.

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