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The second review happens after the loan officer completes the package and signals preliminary screening approval. The package then goes to a lender supervisor who confirms the application is a good potential loan for the bank or lender. From there, the lender then sends the package to an underwriter. The underwriter confirms whether its agency will back up the proposed loan in terms of risk should the borrower default. Ideally, the underwriter has no intention on dealing with a default loan; the agency wants to make sure the loan is a good one with low risk before supporting it. For first-time homebuyers, the federal government steps in to underwrite such loans. Otherwise lenders would likely avoid first-time buyers due to their lower income and lack of assets starting out in life. The processing time for a basic residential loan on a home can run from one week to two months, depending on how much workload a lender has and its screening process. While the government financial regulations require certain practices be followed, lender can vary significantly on how much they grouse a loan application on review. When the loan is considered a good application, the lender will contact the applying borrower in writing and by phone to let him know his residential loan application is accepted. At this point the borrower then needs to sign the actual loan agreements with the lender, committing to the repayment and collateral terms. The government requires that such agreements provide specific notification to the borrower so that he understand what he is committing to. This includes the loan amount, the property information, the terms and penalties for late or non-payment, the interest involved, the time period of the loan, and other specifics. Each of these notifications have to be signed by both the lender and the borrower to confirm acknowledgement of the notices involved. This avoids problems later where a borrower could say he was duped into a bad loan. Once final approvals and agreements are in place, then the borrower is ready to go into escrow with the seller on the property to be bought. During escrow, when construction or purchase terms are met, the bank or lender will release the residential loan funds to complete the sales payment. The seller, upon notice by the escrow officer payment has been made into the escrow account, releases the keys and property title to the new buyer.
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