Congratulations! You have made an offer on a home. Now what happens? Waiting to see if your offer has been accepted can really test your patience. By this point you have been pre-qualified for your USDA loan, and you have crunched the numbers with your real estate agent and your loan officer.
Once your offer is accepted you will be ‘under contract’. At this point you might start hearing many words and acronyms that you are not too familiar with….let us apologize in advance! (As a side note you can check out our FAQs and Mortgage Glossary section if you hear something you might not be familiar with.)
Here are the steps that you will take to complete the loan process:
- Underwriting Approval
- Gathering and Clearing of Conditions
- Rural Development Approval
- Loan Clear to Close
- Signing of Loan Documents
After your offer is accepted by the sellers you (or your agent) will send a copy of the executed contract to your loan officer. Your loan officer will work with you to complete the specifics items on your loan application that involve the property you have selected. He will then send your loan application (electronically) to you to print and sign. The documents you will be receiving include disclosures, government documents, and details on your proposed loan transaction. It will be imperative that each of these documents are signed and dated and returned as quickly as possible.
While you are reviewing and signing the loan documents your lender will contact the title company and request a preliminary HUD 1 Settlement Statement. The settlement statement will give us an estimate of the fees and charges that will be associated with your USDA loan.
Once your loan officer receives your signed loan documents he will submit them to the underwriter for full USDA Loan approval. In some cases, it can take the underwriter a week to issue you full underwriting approval.
Once your loan is approved an appraisal will be ordered by your lender. The appraisal will be ordered through a third party appraisal management company, or AMC. The AMC will randomly select a licensed appraiser to perform an appraisal on your home. The appraiser will review comparable homes that have recently sold in your neighborhood, as well as preforming a walk through of the complete interior and exterior of the home and property to determine a value of the property.
Note: The appraisal is paid for by the buyer at the time of appraisal order and a property inspection is not required by Rural Development but may be done if so desired.
The title company that has been selected to handle the closing will perform a title search on your property. They will search county and public records to find any and all liens and mortgages on the property. They will request payoffs for any lien on the property and prepare the closing paperwork.
Once approved, a loan processor will work with you to gather any items that the underwriter might have requested in the loan approval. The items the underwriter will request will vary, but they can range from things like bank statements, more detailed information on employment or income, to items that may be found on your credit report.
The gathering and clearing on conditions could take a few days to a few weeks depending on the complexity of the condition and your ability to gather the additional items of information for the loan processor.
After the underwriter has reviewed the appraisal and title reports and cleared the conditions on the loan your file will be shipped to Rural Development for USDA approval. Depending on your state of residence the turn time for your file to be reviewed by Rural Development will vary. Click here to review each states current turn times. Once Rural Development reviews and approves your file they will issue a conditional commitment.
After Rural Development has issued the conditional commitment your lender will issue your loan a clear to close. This means your loan is complete and you are ready to close on your loan.
Once your loan is clear to close, the closing will be set with all parties to the transaction. This includes the title company, any realtors involved in the sale, the Seller and the Buyer. Please note title company is used interchangeably with title attorney and escrow agent as each state varies on what they require.
After a closing date, the time and location is set and your file will be transferred to the closing department. The closing department will send the closing instructions to the title company (agent or attorney) usually 24 hours ahead of closing. The title company will then need to prepare the final HUD for approval. The final HUD must be sent to the closing department for them to approve before they allow us to sign.
After the HUD is approved, we will have the final loan figures for you, including any money needed at closing, if applicable.
The closing can be set at the attorney’s office, title companies offices, Realtors offices or usually anywhere that is convenient for you. At the closing you will sit down with the title agent (or attorney) and sign the closing package which will include your deed and the actual mortgage.
What To Bring to your closing:
- Valid picture ID
- If you are married your spouse may need to attend the closing to sign the mortgage. Please check with your title company (attorney) to see if this is required.
- If you need money for the closing you will need either a personal check or certified check. Please check with your title company (attorney) to see what they require.
This is what you have been waiting for! All the hard work and stress has been worth it! During the loan signing the title company will explain each of the documents you sign and give you a copy of all the loan documents you have just signed. Within the next day the deed to your new property will be recorded with the county recorder and you will receive your keys!