FHA Loan Funding Process
For both the broker and the home buyer, entering into the FHA loan funding process is an encouraging and exciting phase. As a buyer, this means that you are really close to getting the keys to your new home. As a broker, entering the funding process means you’re just that much closer to earning commission.
[bctt tweet=”In a perfect world, the mortgage process is broken down into 5 phases over 10-20 days.” username=”FHAloansearch”]
The overall FHA loan process may be broken down into five phases and in a most typical, perfect scenario the process may take 10 – 20 days. The funding process is the phase that takes place after all documents are prepared and right before the “recording” phase. In other words, this is step 4 out of 5. At a high level, the steps go as follows:
- loan origination,
- loan processing,
- document preparation,
- loan funding, and
The home loan funding process typically takes 2 to 4 days and kicks off shortly after all required loan documents have been sent to the title company by a home buyer. For both the buyer and seller, the title company will make certain that all loan paperwork has been properly:
- notarized, and
- returned for closing.
Plan For A Final Credit and Background Check
To make sure all i’s are dotted, you can expect that a last look is given to the overall application to ensure that the integrity of the sale remains intact. In this process, generally what happens is a final check of the buyer’s credit scores/reports and a last employment verification takes place to make certain that nothing has changed since the loan was originally approved. Sometimes things may change and it is recommended that a hopeful home buyer not purchase anything significant (like a car) or change jobs… A big purchase or a change in your income may alter significant loan factors like your credit score or debt-to-income ratio. Doing something like this may result in one of the otherwise common obstacles to a smooth loan approval process.
Anything that may cause a change in your risk profile is something that may delay your ability to get into the loan funding process.
Following that background and credit check, the lender of choice will then fund the home loan to the seller. The money transfer goes straight to escrow in most cases and this is where the actual transaction takes place.
How Quickly Does the Bank Fund The Loan?
The funding process is an important one that may take up to a week to complete. Sometimes funds will transfer to the title company in as little as 2 days but nothing happens until all loan documents get back to the seller for closing. As a best practice, if you are interested in a really streamlined process, inquire about the time in the day your bank requires a transfer to initiate and when you may expect confirmation that everything is processing as expected. A lender will almost always fund escrow through a wire transfer or ACH payment.
Let’s Assume That Funding Is “Good To Go”
For sake of this post and keeping things upbeat, let’s go ahead and assume that your FHA home loan funding process goes through without delay. This is great news! After the title company is able to confirm that the loan has been funded, you are moving on to the final step of the closing process which is called the “Recording Phase.” At this point, have your champagne ready and start planning your move.