UNDERSTANDING THE LOAN APPROVAL PROCESS IN TODAY’S ECONOMY

Your First Step to GET Your Loan Closed!

If you do not understand what is going to happen to your loan application the likelihood is that NOTHING will happen to your application. How many times have you heard your lender tell you “It’s in Underwriting”?

When a lender has no idea what is going on with your loan they always say the same thing, “it’s in underwriting”.

You must understand from the outset that unless you presented your loan to the president of the bank, than the person who you submitted your loan to has absolutely ZERO say if it is going to be approved.

They typically will smile, nod and tell you that the application looks great, and that you shouldn’t worry about the loan getting approved. They will then end with a casual don’t call us, we will call you.

Then what…

You wait…And wait…

Finally, after getting tired of waiting for that return call you pick up the phone - nervously you contact your supposed “friend” at the bank. You politely but firmly ask the status of your loan. If the person even remembers you, they will likely stall, pull up the loan status spreadsheet on their computer, track down your name and the physical location of your file. Then you get the inevitable response that your loan is “In Underwriting.”

Frustrated you respond can I get a better status, can I talk to the underwriter, can I just know if and when my loan is to be approved. Reluctantly your “friend” says that no one can talk to the underwriter and you just have to wait and be patient.

There has to be a better way!

Well we are getting way ahead of ourselves, lets slow down and start at the beginning of the loan process, and after all, we have ten secrets to share with you, not just one.

The loan approval process is a series of mini-approvals which eventually, if done correctly by both lender and client, will yield the final approval. Much more on these mini-approvals in ,GET Your Loan Closed!

Within these reports you will learn the critical components of the loan proposal which must be satisfied by the lender/underwriter in order to advance through what I call mini-approvals.

By now I hope you have a greater understanding of the type of information that I will be giving you over the next thirty days.

Back to these mini-approvals…

1. After the loan is preliminarily packaged and the banker has looked at the details and become comfortable with the loan they will issue a Letter of Intent or a LOI.

This Letter of Intent is exactly that and no more. The Lender intends to take your loan forward. This is not an approval.

2. After step one the banker will request, in writing, from the client that the client wants to proceed. This is done by having the client execute the LOI and the bank requesting a deposit to take the loan to the next step. To view different examples of LOI’s order our book, GET Your Loan Closed!

3. Step three is a massive collection of paperwork from the borrower regarding financials, tax returns, projections, cash flow analysis, bank statements, verifications of deposits, employment, certification of tax returns (4506’s), etc. etc..

4. Step four of the mini-approvals process will be the complete review of all the reports that were requested in step two. Each one of the reports has to be approved so the loan can continue on its trajectory for approval. Find out what all these reports are and mean by getting you own copy of our 95 color page book, GET Your Loan Closed!

5. Step five is the final packaging of all the documentation and the underwriters “write up.”

After all these mini-approvals have been accomplished your completed loan package is then, and only then, submitted to an underwriter. The role of the underwriter is to verify all the submission reports that the Business Development Officer has presented to underwriting

6. Step six is submission to final credit approval, also known as the loan committee.

The loan committee makeup will vary drastically as to whether you are dealing with a small local bank, an independent bank or one of the big boys such as Wells Fargo or Washington Mutual to name a few. Lots more great info in our book , GET Your Loan Closed!

Each bank or financial institution will have a policies and procedures as it relates to credit guidelines. Also, each underwriter will have their lending limit that they can approve without taking the loan to the next level of approval. For example, a small loan of $100,000.00 can be approved by one signature of the underwriter, but that same loan package for $500,000.00 would have to be approved by at least three of the five loan committee members.

After all approvals are done, a final commitment letter is issued and the loan goes to the documentation stage. We will not be discussing the documentation issues, as each bank does it very differently. Instead we will be congratulating you on the fact that you were able to GET Your Loan Closed!