Page 13 - Butterfly Realty LLC

The Loan Estimate-Closure Disclosure (CD)

All the documentation is pulled together to produce the Loan Estimate. The Loan Estimate describes
the terms and predicts the costs associated with your loan. By law, you must receive it within three days
of your application.

The Loan Estimate includes closing costs, the interest rate and monthly payments (principal, interest,
taxes and insurance). A notification is included if interest rates can change in the future, as would be the
case with Adjustable-Rate Loans (ARMs). It also includes information about any special features such as
pre-payment penalties or if the loan balance can ever increase in spite of you paying on time (called
negative amortization).

At this stage, you’re not yet approved nor denied a loan. A loan estimate is simply a statement of the
terms and estimated fees in plain English. It’s like getting an estimate for dental work; the dentist has
not begun any procedures yet; you’re just getting a sense of the work that will be done and how much
it’ll cost.

Loan Processing

Loan processors gather documentation about the borrower and property, review all information in the
loan file and assemble a complete package for the underwriter. The processor is your contact during all
processing and compiling of information for loan submission. Email all information for loan processing to
your processor.

Here are a few things they will be gathering:

• Order credit report (if not already pulled for a pre-approval)
• Start verifying employment and bank deposits

• Order property appraisal
• Order title search

Underwriting

The underwriter is the key decision-maker. They closely evaluate all the documentation prepared by the
loan processor in the loan package. They cross check to see if the borrower and property match the
eligibility requirements of the loan product for which the borrower applied. For example, for a VA loan,
the underwriter will verify the borrower’s military service.

Underwriters review the borrower’s credit history and their capacity to repay the loan. The collateral
(the property) is also weighed into the decision. They verify information and double check for accuracy.
They are looking out for any red flags that indicate potential fraud.