Intent to Proceed and Mortgage Loan Estimates

Published on December 20, 2016

– 7 min read

When it comes time to review official Loan Estimates from lenders and give your Intent to Proceed (ITP), it pays to have a mortgage company that works online.

Once you fill out a few keys pieces of information for your loan application, your lender will provide you with a “disclosure package” — a stack of documents for you to review and sign. This is a point where having an online lender with the ability to electronically sign documents comes in handy.

There are literally hundreds of pages of notices, warnings, and disclosures coming your way. It’s all legal paperwork that lenders are required to provide, regardless of who you partnered with to fulfill your home loan. Documents generally fall into three categories:

 

  1. Things for the government’s benefit – An example is the FBI mortgage fraud warning, which you must sign.
  2. Things for the lender’s benefit – An example is the Credit Report Authorization Certificate. By signing this document, you allow the lender to pull a full credit history, including your FICO score and any debts you may have.
  3. Things for your benefit – The government requires lenders to give you educational resources. One example is a list of homeownership counseling organizations near you, which you can use as a third-party resource for advice. Another example is the CFPB Home Loan Toolkit, a worksheet to help you understand the mortgage process.

These documents will come at you all at once, which may be a lot to take in. But a lot of them are actually helpful, useful, or interesting. After the financial crisis, government regulators wanted to make sure borrowers had enough information to make a responsible decision prior to signing their documents.

 

Take your time reviewing the materials that are provided, and make sure you have a clear understanding of any document that requires a signature. If you have any questions, make sure to reach out to your loan officer for clarification.

 

There are two very important documents that are included in the disclosure package. They are the Loan Estimate and the Intent to Proceed. Both are relatively new, and they have significantly changed the way mortgages are processed.

Loan Estimate

The Loan Estimate is a standardized document your lender is required to give you. Legally, it must be provided to you within three business days of your initial application, so it will come relatively quickly. You can view a sample Loan Estimate document below.

See a sample loan estimate document from the CFPB.

The loan estimate breaks down the core elements of your mortgage — loan amount, interest rate, and monthly payment. Most importantly, it lays out very clearly what your closing costs are and what your estimated cash to close is, and gives you a full accounting of all the fees you’ll be required to pay.

The Loan Estimate is one of the most important documents in this early stage. Because it’s standardized for all lenders, it is the easiest way to compare home loans.

To shop for the best loan, you should apply with multiple lenders. Once you get your Loan Estimate worksheets back, you can easily compare the interest rates, closing costs, and fees. It’s a great way to keep everything transparent and aboveboard, and a fantastic tool to make sure you’re getting the best deal. (It’s also not the worst form we’ve ever seen. Kudos to the regulators for putting a little effort into the design!)

 

Intent to Proceed

The next big item to look for is your Intent to Proceed. You can apply with as many lenders as you want. There’s little harm in collecting a bunch of Loan Estimates (other than getting your credit pulled over and over again). The Loan Estimate is valid for 10 days. If you don’t respond within that window, the lender has to assume you are not interested in working with them.
But let’s say you are ready to move forward, then what? You will give the lender your “Intent to Proceed.”

    Prior to this step, working with a lender didn’t cost you anything.

 
We would love to show you what Intent to Proceed looks like, but there isn’t actually a standardized way to provide your intent to proceed. It may be as simple as a verbal “okay” to move forward, or an email confirming you are ready to go, but in many cases it will be a document that the lender provides and you sign.

 
Giving a lender your Intent to Proceed might be a big deal for a few reasons. It could be a commitment to work together. Prior to this step, working with a lender didn’t cost you anything. After you give your Intent to Proceed, some lenders might start ordering title, scheduling the home appraisal, and triggering other processes that cost money – potentially your money. If your deal falls apart for whatever reason, and you don’t close the loan, you may still be required to pay these fees.

Loan Estimate & Intent to Proceed Summary

It’s a great idea to apply for a loan with different banks and mortgage companies. It doesn’t cost you a thing but time and effort. You will end up with multiple Loan Estimates, which will allow you to compare your options in an apples-to-apples way. After that, you will provide your Intent to Proceed to one mortgage lender — the one that you choose to work with

 
If you have any questions, chat with a licensed Loan Specialist. If you’re ready to see rates, you can do so in about 3 minutes online.

Steven Fung
Steven Fung is a licensed Loan Specialist at Clara with over 17 years of experience. When he doesn’t have his mortgage hat on, he enjoys repairing old cars and working on home improvement projects.
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