Your Loan Process

Pre-Qualification Phase

Beam Mortgage Inc gathers information from you about your income, debts and assets and reviews your credit report, then makes a preliminary financial determination about how much house you may be able to afford.  This information can be acquired by completing the standard loan application, or by completing a quick phone questionnaire, with much less detailed information. We encourage you to complete the standard loan application form initially as you will be required to complete it before we can fully process your loan. You will also need to sign an authorization to allow BEAM Mortgage Inc to access your credit report. If you qualify, a Pre-qualification letter is issued showing the amount of loan you qualify for.The Pre-qualification is only as good as the information that you give, and is subject to our verification of that information during processing of your application.         

 

Document Checklist

When preparing to apply for a home mortgage, you should be aware of some standard documentation that we usually will ask to see. Here is a list of items you will probably need in order to apply for a loan:

- W-2 for past two years and complete pay stubs covering the most recent 30 days
- If self-employed, tax returns for the prior two years and balance sheet for your company
- Name and address of employer- Last two months’ bank statements- Latest investment statements
- Home purchase contract (if applicable)
- Divorce decree and child support documentation, if applicable. We may also require other documentation once we begin to process your loan.        

   

Mortgage Programs   

The selection of a mortgage program can be rather complicated, and we highly recommend that a Beam Mortgage Inc loan consultant help you with the decision process. There are many loan products available in the marketplace today, and the guidelines for these products change continually. At Beam Mortgage Inc, we require all our loan consultants to know the current guidelines for each product, on a daily basis.     

      

Conventional Financing

Most conventional loans are also considered to be “conforming loans,” meaning that they fit within the guidelines of Fannie Mae or Freddie Mac. The most obvious guideline limitation on conforming loans is the maximum loan limit set by Fannie Mae and Freddie Mac.There are more conventional loan programs available than programs insured by a government agency. The most common programs are Fixed rate mortgages and adjustable rate mortgages.   In addition to the programs available, there are many loan features available for these programs that appeal to specific financing needs: 


1. Longer or shorter loan terms  
2. Loan-to-value guidelines that allow higher ratios  
3. Varying income-to-debt ratio requirements (qualifying ratios)  
4. Adjustable-rate loans with various indexes, margins and cap combinations and change dates (please see the discussion of adjustable-rate loans)  
5. Mortgage insurance requirements (please see the discussion of private mortgage insurance and FHA mortgage insurance)  
6. Differing appraisal requirements  
7. Various credit score requirements



If you are trying to decide between a conventional loan and a loan insured by a government agency, here are some key differences that may be important to your financial objectives. First, if mortgage insurance is required on an FHA or conventional loan (VA loans do not require the veteran to pay for mortgage insurance), it can raise your monthly payment. Second, one of the major benefits of a loan insured by a government agency is that down payment requirements are less than those of most conventional programs. Finally, conventional loans offer a more streamlined origination process since they usually have fewer documentation requirements.                        

 

FHA FEDERAL HOUSING ADMINISTRATION (FHA) LOANS

A loan insured with FHA may be a viable option for someone who does not meet the program requirements for a conventional financing (please see “Conventional Financing”), but who still has the ability and the desire to own a home.FHA program guidelines permit down payments as low as 3.5 percent of the purchase price (as opposed to at least five percent on most conventional financing). FHA programs limit the type of fees that borrowers may be charged.Beam Mortgage Inc is an approved FHA lender. Please contact Beam Mortgage Inc to see if an FHA loan is right for you.                       

 

VA VETERANS ADMINISTRATION (VA) LOANS

VA Loan benefits are currently available for veterans of U.S. military service who received an honorable discharge. If there are concerns or questions on eligibility, please contact the nearest VA regional office.The veteran will need to present to the Lender a Certificate of Eligibility, which can be obtained by submitting form 26-1880 (Request for Determination and Available Loan Guaranty Entitlement) to the nearest VA regional office. A veteran who has previously used his or her VA entitlement may request that the VA restore it to purchase another home as long as:  

1. The prior VA loan has been paid in full and the property sold;  
2. A qualified veteran buyer agrees to buy the home, assume the VA loan and substitute his or her entitlement for the same amount originally used by the veteran seller; and  
3. The loan is paid in full but the property is not sold.

The veteran may have a one-time-only restoration of eligibility. The process to obtain a VA loan is not that much different than any other loan. The lender reviews the veteran’s Certificate of Eligibility, completes the application, verifies the veteran’s credit, asset, income and debt information, and reviews the appraisal. However, there is a difference in the appraisal process. A VA appraiser assigned by the nearest VA office must appraise the home under specific guidelines set by VA and at specific fee levels approved by VA, and must issue a CRV (Certificate of Reasonable Value).

There may be a little more involved in the lending process for a VA loan, but here are some of the benefits for a veteran:  

1. In most cases, there is little or no down payment.  
2. Subject to certain limits, VA offers to guarantee the loan to the lender without a monthly mortgage insurance payment by the veteran. However, where one or more of the borrowers (other than the veteran) is not a veteran or the spouse of the borrowing veteran, this VA guarantee applies only to a veteran’s portion of a loan.  
3. There are limits on the amount of closing costs and which party to the transaction can pay the closing costs associated with a VA loan.  
4. There are specific appraisal (CRV) requirements designed to protect the veteran (however, this is not a guarantee of value or that the home is free of defects).  
5. VA loans may generally be assumed, meaning that the veteran may be able to sell the home with the VA loan intact, subject to VA’s approval of the assuming party’s credit, income and debt.  
6. VA provides counseling to the veteran during the life of the loan, especially during times of financial difficulties.  
7. VA loans do not have prepayment penalties.  
8. There are a number of different VA loan programs with a choice of repayment plans.

 

Application for Approval

With the help of a Beam Mortgage Inc Loan Officer, you complete a mortgage application for a particular loan program and supply all of the required documentation for processing.  Beam Mortgage Inc will discuss various fees, rate-lock and down payment options with you at this time, and the loan officer will deliver a Good Faith Estimate (GFE) and an initial Truth-In-Lending Disclosure (TIL) that will contain an estimated annual percentage rate (APR) within three days of the date of your application that itemize the rates and estimated costs for obtaining the loan. You may or may not choose to lock the interest rate on your loan at this time.The key form that you must complete is the loan application form itself. The application identifies the property being financed, you and any co-borrowers, all employment information, all assets and liabilities, and other pertinent information that will support the decision on whether you are financially able to maintain the payments. The property being financed is also being evaluated to see if it is adequate security for the loan. Clearly, it is vital that the loan application be complete and accurate. The next stages of the loan may go more quickly if there are no discrepancies or issues in the application.We rely on credit information from national credit repositories obtained by ordering and reviewing a credit report for all the borrowers on the application. We will compare the debt information on the application to the credit report and investigate and document discrepancies that are in the loan file.

 

Processing

The processor will review the credit reports and documentation that you supplied as part of your loan application to verify your income, assets, employment, debts, and payment histories.  The processor will contact your employer and bank directly to verify your relationship with them. If the credit report indicates unacceptable late payments, collections or judgments or other credit history issues, then the processor will request a written explanation from you. If there are incorrect entries on your credit report, the loan processor will work with you to get them removed.The processor will also order and review a title company commitment to issue a title policy on the property insuring your ownership and lender’s lien, a property survey in some cases, a tax certificate to be sure that the property taxes are current, and a flood certificate to ascertain whether the property is in a federal flood zone. If the property is in a flood zone, then we will be able to make the loan as long as you obtain flood insurance on the property.The processor will also order and review the property appraisal. The appraised value of the property is essential, since the property serves as the sole security for the loan. The appraised value, as part of the loan-to-value (LTV) calculation, will also determine how large a loan we can make based on that security. The loan product for which the borrower applied will have specific guidelines for a maximum LTV ratio. The appraised value from the appraisal and the maximum LTV ratio from the guidelines will yield the maximum amount that the lender can lend to stay within the loan product guidelines. Maximum LTV guidelines vary widely among loan products. For example, most conventional loans allow maximum LTV ratios of seventy-five to eighty percent of appraised value, although they may be higher for loans with private mortgage insurance (PMI).

 

UNDERWRITING

The lender will ‘underwrite’ your application, which means that they will compare your credit and income information and the property you want to finance against their loan guidelines for the loan product you want. Generally, they will look for verified, stable income, manageable debts (including the anticipated payment on the house you wish to finance), and a credit history, as shown through your credit report, indicating a willingness and an ability to repay money lent to you.  They will review the property appraisal to be sure that it indicates a value sufficient to justify the loan amount, as well as a house in good enough condition to meet our guidelines.

 

DECISION

We at Beam Mortgage Inc will do everything we can to get your loan application approved. If the lender approves your loan application, they will issue a conditional commitment to fund your loan. It is conditional because the lender may need some additional information or action from you (sometimes called ‘closing conditions’) before they will close your loan.

 

CLOSING

Once you have helped us clear up any conditions to your loan, we can schedule a more specific closing date and time with a title company.  At closing you will sign the documentation to take ownership of your home, as well as get title insurance for your home.  You will receive a ‘settlement statement’ that will detail all of your expenses in the transaction, as well as how your loan proceeds were distributed. You will also receive a title policy that insures your ownership of the property.

 

 
 
   
   
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