Mortgage Loan Approval Process – ListDen

When buying a home for the first time, most of the people find mortgage home approval process complicated. So you need not panic if you are also the one!

We are here to explain the whole typical process to you. Go through the following six-step process, and we are sure that things will become clearer to you in a better way.

 

  1. Mortgage Pre-Approval

You can consider the mortgage pre-approval process as a financial pre-screening. It is the first step of the whole, so it happens before you start shopping for a home. In this, the lender examines your financial condition to make sure that whether you are a good candidate for a loan or not. They will also tell you the amount which they can lend you after reviewing your financial condition. At this stage, your credit report might also be checked.

This step is advantageous as it will help you narrow your home search depending on your budget.

 

  1. House Hunting and Purchase Agreement

After being approved for a certain amount, you can look for a house in your budget. While looking for a house, you should consider your needs. Also, find an agent who can help you in house hunting.

After finalizing the house, you have to fill an application form, which is the purchase agreement.

 

  1. Mortgage Loan Application

Just after you have made an agreement to buy the house with the seller, the next stage, which is mortgage loan application comes into the scenario. In this process, the lender uses URLA(Uniform Residential Loan Application) form, which is also known as Fannie Mae form 1003. In this form, details about the buyer, the property being purchased, and the type of loan being approved are specified.

 

  1. Mortgage Processing

This step is the most crucial step of the whole mortgage loan approval process. After the completion of the loan application, your file will move to the processing stage.

In this stage, the loan processor collects important documents related to the buyer and property. These documents include tax records, bank statements, purchase agreement, employment letters, and more. The steps performed by the processor can vary from company to company and the type of loan.

 

  1. Mortgage Underwriting

The underwriter is the key decision-maker of the whole process. He thoroughly examines all the documentation for the loan. He is the one who is having the authority to reject the loan if the criteria do not match.

The primary responsibility of the underwriter is to check if you will be able to make the mortgage payments on time or not. This individual focuses on three C’s which are –

> Capacity

> Credit

> Collateral

 

  1. Mortgage Loan Approval and Closing

If the underwriter is satisfied and all the guidelines of loan approval meet then, he will label it as ‘clear to close.’ It means that the loan can be funded.

Before closing all the documents are sent to the company who is handling the closing. At the time of the closing, the buyer and seller sign all the relevant documents. Also, before closing the buyer receive a closing disclosure in which all the details about the loan are mentioned.

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