It is important to remember there is flexibility here and each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, another strong point could make up for the weak one.
Ijara Programs and Rates
Once the application has been submitted, the processing begins. The processor orders the Credit Report, Appraisal and Title Report. The information on the application, such as bank deposits and payment histories, are then verified. Any credit derogatory, such as late payments, collections and/or judgments require a written explanation. The processor examines the Appraisal and Title Report checking for property issues requiring further investigation. The entire Ijara™ Islamic finance package is then put together for submission to the lender.
If you’re applying to replace your existing mortgage you will need to provide a copy of your first mortgage note and deed of trust as well as the documents already mentioned. These items will normally be found in your loan closing documents.
- Identifying Information
- Employment Information
- Credit Information
- Public Record Information
- Pay your bills on time.
- Keep Balances low on credit cards.
- Limit your credit accounts to what you really need. Accounts that are no longer needed should be formally canceled since zero balance accounts can still count against you.
- Check that your credit report information is accurate.
- Be conservative in applying for credit and make sure that your credit is only checked when necessary.
Therefore, when you have derogatory credit, all of the other aspects of the loan application need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision. Various combinations are allowed when determining your grade, but the worst-case scenario will push your grade to a lower credit level. Late loan payments and bankruptcies/foreclosures are the most important factors. Credit patterns, such as a high number of recent inquiries or more than a few outstanding loans, may signal a problem. Since an indication of a “willingness to pay” is important, several late payments in the same time period is better than random late, according to conventional industry thought.
Once the processor has put together a complete package with all verifications and documentation, the file is sent to the lender. The underwriter is responsible for determining whether the package is deemed an acceptable loan. If more information is needed the loan is put into “suspense” and the lessee is contacted to supply more information and/or documentation. If the loan is acceptable as submitted, the loan is put into an “approved” status.
Once the loan is approved, the file is transferred to the closing and funding department. They notify the broker and closing attorney of the approval and verify broker and closing fees. The closing attorney then schedules a time for the lessee to sign the loan documentation.
At the closing the lessee should:
- Bring a cashier’s check for your down payment and closing costs if required. Personal checks are normally not accepted and if they are they will delay the closing until the check clears your bank.
- Review the final loan documents. Make sure that the profit rate and loan terms are what you agreed to. Also, verify that the names and address on the loan documents are accurate.
- Sign the loan documents for your Islamic finance transaction.
- Bring identification and proof of insurance.
After the documents are signed, the closing attorney returns the documents to the lender who examines them and, if everything is in order, arranges for funding. Once the loan has funded, the closing attorney arranges for the Ijara™ Lease, Option/Promise to Purchase, mortgage note and deed of trust to be recorded at the county recorders office. Once the Ijara™ has been recorded, the closing attorney then prints the final settlement costs on the HUD-1 Settlement Form. Final disbursements are then made.
A typical “A” Ijara™ transaction takes between 14-21 business days to complete, but you should allow for up to 4 weeks. The new automated underwriting process speeds up the process. Contact one of our experienced marketing agents today to discuss your particular Ijara™ needs or fill out the Pre-Qualification Form and a licensed broker or representative will promptly get back to you.