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Loan Process

Loan Approval VS. Pre-Qualification

In today's housing market, time is a luxury that you just don't have.  When you find that perfect home, you have to be ready to make your best offer.  The problem is that the type of offer you make, may be the difference in getting the home or losing out to someone else.

Sellers and Selling Agents are looking for the strongest buyers out there and by law, they have the right to determine which contract offer they will accept, regardless of when an offer is made.

A Pre-qualification is simply a rough statement from a lender that says you have applied for a loan.  It does NOT guarantee that you have the loan that you have applied for.  It's basically an assumption that your lender can obtain a loan, based upon the information provided.  In other words, it isn't worth the paper that its printed on.

At IMS Mortgage, we provide our clients with a SAME DAY LOAN APPROVAL.  We are able to do this because we are the final decision makers.  We don't need to send your loan to a third party to get a decision.  Our approval is very detailed and shows exactly what type of loan and how much you have been approved for.  Its basically the same as a cash offer with no contingencies. 

You see, sellers can legally discriminate between offers on the basis of the type of approval they have.  So when your Agent presents your offer with your loan approval, it validates your offer because the sellers will now know that you are already approved and any obstacles to closing have been removed, versus another offer that has only been Pre-Qualifed.  


Mortgage Programs and Rates

To properly analyze a mortgage program, you need to think about how long you plan to keep the loan. If you plan to sell the house in a few years, an adjustable or balloon loan may make more sense. If you plan to keep the house for a longer period, a fixed loan may be more suitable.

With so many programs from which to choose, each with different benefits and options, shopping for a loan can be time consuming and frustrating. At IMS Mortgage we evaluate your situation and recommend the most suitable mortgage program, thus allowing you to make an informed decision.

The Application

Because we provide our exclusive "concierge service" to our clients, once we have received the Requested Documents,  we will complete the application on your behalf and send you the Initial Disclosures for your review and E-signatures.

A loan application is not considered complete until you have given us at least the following information: (1) Your name, (2) Your income, (3) Your Social Security number (and authorization to check your credit), (4) The address of the home you plan to purchase or refinance, (5) An estimate of the home's value and (6) The loan amount you want to borrow.

The Loan Estimate

A Loan Estimate is a three-page form that you receive after applying for a mortgage. The Loan Estimate tells you important details about the loan you have requested. We will deliver this to you with in 3 days of your fully completed loan application. The Loan Estimate provides you with important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. In addition, the Loan Estimate will also indicate if the loan has special features that you will want to be aware of, like penalties for paying off the loan early (a prepayment penalty) or increases to the mortgage loan balance even if payments are made on time (negative amortization). The form uses clear language and is designed to help you better understand the terms of the mortgage loan you’ve applied for. All lenders are required to use the same standard Loan Estimate form. This makes it easier for you to compare mortgage loans so that you can choose the one that is right for you. When you receive a Loan Estimate it does not mean that your loan has been approved or denied. The Loan Estimate shows you what loan terms we can offer you if you decide to move forward.

The Intent to Proceed

After you receive your Loan Estimate, it is up to you to decide whether to move forward with us or not. If you decide not to proceed with an application for a particular loan, you don’t need to do anything further. If you do intend to proceed with us, you must take the next step and tell us in writing or by phone that you want to move forward with the application for that loan. All lenders are required to honor the terms of the Loan Estimate for 10 business days. So, if you decide to move forward more than 10 business days after you receive a Loan Estimate, please realize that market conditions may make it necessary to revise the terms and estimated costs and provide you with a revised Loan Estimate.


At IMS Mortgage, our focus is on speed and efficiency and we do our best to remove any stress from the loan process.

We don't wait like other lenders. Items such as Credit Reports, Appraisals, Title and Payoffs will have already been ordered on your behalf. This is why we request all documents up front.  We underwrite our files in-house to ensure that there are NO suprises that could cause a delay in closing.

If there are any issues of concern, your loan representative will contact you directly and request any additional infomation that may be needed. 

Requested Documents

At the time of application, based upon whether you are buying or refinancing,  your IMS Mortgage Representative will request from you, the following documentation to complete your loan file:

  • Pay stubs covering the previous 30-day period
  • W-2 statements for all employers for the previous two (2) years
  • Personal Tax Returns for the previous two (2) years (All schedules must be included)
  • Social Security Awards Letter (if applicable)
  • Pension Awards Letter (if applicable)
  • Bank statements for the previous two (2) months (Include all pages even if they are blank)
  • Any Asset statements (401K, Stock, Bonds, CD's, etc.) for the previous two (2) months (Include all pages even if they are blank)
  • Divorce Decree (if applicable)
  • The name and contact number of your insurance agent
  • Current Drivers License

If you are purchasing a home, you will also need to provide the following:

  • Copy of the purchase contract (All addendums and riders must be included)
  • Copy of the Earnest Money check

If you are refinancing a home, in addition to the requested information, you will also need to provide the following:

  • Copy of your current mortgage statement

If you are not a US citizen, you will need to  provide a copy of your green card (front and back), or if you are NOT a permanent resident provide your H-1 or L-1 visa.

Credit Reports

Most people applying for a home mortgage need not worry about the effects of their credit history during the mortgage process. However, you can be better prepared if you get a copy of your Credit Report before you apply for your mortgage. That way, you can take steps to correct any negatives before making your application.

A Credit Profile refers to a consumer credit file, which is made up of various consumer credit reporting agencies. It is a picture of how you paid back the companies you have borrowed money from, or how you have met other financial obligations. There are five categories of information on a credit profile:

  • Identifying Information
  • Employment Information
  • Credit Information
  • Public Record Information
  • Inquiries

NOT included on your credit profile is race, religion, health, driving record, criminal record, political preference, or income.

If you have had credit problems, be prepared to discuss them honestly with a mortgage professional who will assist you in writing your "Letter of Explanation." Knowledgeable mortgage professionals know there can be legitimate reasons for credit problems, such as unemployment, illness, or other financial difficulties. If you had problems that have been corrected (reestablishment of credit), and your payments have been on time for a year or more, your credit may be considered satisfactory.

The mortgage industry tends to create its own language, and credit rating is no different. BC mortgage lending gets its name from the grading of one's credit based on such things as payment history, amount of debt payments, bankruptcies, equity position, credit scores, etc. Credit scoring is a statistical method of assessing the credit risk of a mortgage application. The score looks at the following items: past delinquencies, derogatory payment behavior, current debt levels, length of credit history, types of credit and number of inquiries.

By now, most people have heard of credit scoring. The most common score (now the most common terminology for credit scoring) is called the FICO score. This score was developed by Fair, Isaac & Company, Inc. for the three main credit Bureaus; Equifax (Beacon), Experian (formerly TRW), and Empirica (TransUnion).

FICO scores are simply repository scores meaning they ONLY consider the information contained in a person's credit file. They DO NOT consider a person's income, savings or down payment amount. Credit scores are based on five factors: 35% of the score is based on payment history, 30% on the amount owed, 15% on how long you have had credit, 10% percent on new credit being sought, and 10% on the types of credit you have. The scores are useful in directing applications to specific loan programs and to set levels of underwriting such as Streamline, Traditional or Second Review. However, they are not the final word regarding the type of program you will qualify for or your interest rate.

Many people in the mortgage business are skeptical about the accuracy of FICO scores. Scoring has only been an integral part of the mortgage process for the past few years (since 1999); however, the FICO scores have been used since the late 1950's by retail merchants, credit card companies, insurance companies and banks for consumer lending. The data from large scoring projects, such as large mortgage portfolios, demonstrate their predictive quality and that the scores do work.

The following items are some of the ways that you can improve your credit score:

  • Pay your bills on time.
  • Keep Balances low on credit cards.
  • Limit your credit accounts to what you really need. Accounts that are no longer needed should be formally cancelled since zero balance accounts can still count against you.
  • Check that your credit report information is accurate.
  • Be conservative in applying for credit and make sure that your credit is only checked when necessary.

A borrower with a score of 680 and above is considered an A+ borrower. A loan with this score will be put through an "automated basic computerized underwriting" system and be completed within minutes. Borrowers in this category qualify for the lowest interest rates and their loan can close in a couple of days.

A score below 680 but above 620 may indicate underwriters will take a closer look in determining potential risk. Supplemental documentation may be required before final approval. Borrowers with this credit score may still obtain "A" pricing, but the loan may take several days longer to close.

Borrowers with credit scores below 620 are not normally locked into the best rate and terms offered. This loan type usually goes to "sub-prime" lenders. The loan terms and conditions are less attractive with these loan types and more time is needed to find the borrower the best rates.

All things being equal, when you have derogatory credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision. Various combinations are allowed when determining your grade, but the worst-case scenario will push your grade to a lower credit grade. Late mortgage payments and Bankruptcies/Foreclosures are the most important. Credit patterns, such as a high number of recent inquiries or more than a few outstanding loans, may signal a problem. Since an indication of a "willingness to pay" is important, several late payments in the same time period is better than random or spread late payments.

Appraisal Basics

An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.

Using three common approaches, which are all derived from the market, derives the opinion, or estimate of value. The first approach to value is the COST APPROACH. This method derives what it would cost to replace the existing improvements as of the date of the appraisal, less any physical deterioration, functional obsolescence, and economic obsolescence. The second method is the COMPARISON APPROACH, which uses other "bench mark" properties (comps) of similar size, quality and location that have recently sold to determine value. The INCOME APPROACH is used in the appraisal of rental properties and has little use in the valuation of single-family dwellings. This approach provides an objective estimate of what a prudent investor would pay based on the net income the property produces.


Once the processor has put together a complete package with all verifications and documentation, the file is sent to our investor for final review. They will determine whether the package is deemed a saleable loan. If more information is needed, they will request it and your IMS representative will contact you directly to obtain it.  If the loan is saleable as submitted, the loan is put into a "clear to close" status and you are done.  At this point, the end investor and the title company will reconcile figures and determine the final amount needed for closing.

Closing Disclosure

The Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

We are required by law to give you the Closing Disclosure at least three business days before you close on your mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from us. The three days also gives you time to ask us any questions before you go to the closing table.


Once the loan is cleared to close, the file is transferred to the closing and funding department. The funding department notifies the Title company and they begin the reconciliation process. Once figures have been reconciled, your IMS representative will contact you directly with the amount needed for closing.

At the closing, you should:

  • Bring a cashier's check for your down payment and closing costs if required. Personal checks are NOT acceptable. Only certified funds will be accepted.  You may request to send funds via wired transmission directly to the title company from your lending institution.  If you wish to wire funds directly, you will need the Title company's wiring instructions.  We can provide these instructions.
  • Review the final loan documents. Make sure that the interest rate and loan terms are what you agreed upon. Also, verify that the names and address on the loan documents are accurate.
  • Sign the loan documents.
  • Bring identification and proof of insurance.

After the documents are signed, the closing agent will email the documents to the funder who examines them and, if everything is in order, issues the funding number. Once the loan has funded, the Title company arranges for the mortgage note and deed of trust to be recorded at the county recorder's office.


A typical "A" mortgage transaction takes between 14-21 business days to complete. With new automated underwriting, this process speeds up greatly. Contact one of our experienced Loan Officers today to discuss your particular mortgage needs or Apply Online and a Loan Officer will promptly get back to you.