Application
The "application" is actually the beginning of the loan process and occurs after you have found a property to purchase or decided to refinance. You complete a mortgage application for a particular loan program and supply of documentation necessary. You should receive a Good Faith Estimate and a Truth-in-Lending Disclosure within three days that itemize the rates and estimated closing costs.
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Processing of your loan
The lender will then submit the application package to an automated underwriting system that will provide the lender with a list of any other necessary documentation needed for final approval. The processor reviews the credit report, and documentation to verify your employment, debts, and payment histories. If there are unacceptable late payments, collections for judgments, etc., the processor requests a letter of explanation in writing from you. The processor's job is to put together an entire application package for the lender's underwriter.
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Underwriting
It is the underwriter's responsibility to determine whether the application package prepared by the processor meets all the lender's requirements. The loan may be put into "suspense" if additional documentation is needed. If the underwriter approves the loan, the lender will issue a conditional commitment to lend, which means the loan is approved based on certain condition being cleared.
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Closing
The closing will occur after all conditions are cleared and the lender issues a full loan approval. The lender "funds" the loan with a cashier's check, draft or wire to the closing agent who disburses funds in exchange for the title to the property. This is the end of your loan process.
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