Mortgage Loan Approval Process USA - Fairway New Englandby Maria John Senior Mortgage Executive
If you are the First-time home buyers then its very hard to you for mortgage approval process because its very confusing and overwhelming. For the help of first time home buyer we’ve created first time home buyers guide to you through the different steps in a typical mortgage approval process usa.
Steps in the Mortgage Approval Process
We have created the mortgage loan approval process in very easy steps. So let’s starts with the first step of mortgage home loan approval process:
Step 1: Mortgage Pre-Approval
Mortgage pre-approval is an important step for the mortgage. This step helps to clarify your mortgage budget or the monthly mortgage payment you can handle. Before lenders decide to pre-approve you for a mortgage, they will look at several key factors:
- Your credit history
- Credit score
- Debt-to-income ratio
- Employment history
- Assets and liabilities.
Step 2: House Hunting and Purchase Agreement
Once you’ve been pre-approved for a certain amount, you can shop more confidently within that price range. And that brings you to the second major step in the mortgage approval process — house hunting.
Your mortgage lender isn’t heavily involved at this stage. The house hunting work is primarily done by the buyers and their real estate agents.
Step 3: Mortgage Loan Application
When you’ve been pre-approved for a loan. You’ve found a home that meets your needs, and you’ve made an offer to buy it. Now it’s time for the next stage of the mortgage approval process, and that’s the loan application.
In this step lenders use the same standardized form. They use the Uniform Residential Loan Application (URLA), also known as Fannie Mae form 1003. The application asks for information about the property being purchased, the type of loan being used, as well as information about you, the borrower.
Step 4: Mortgage Processing
Once you have a purchase agreement and a completed loan application, your file will move into the processing stage. This is another important step in the broader mortgage loan approval process.
Mortgage processing is when your personal financial information is collected and verified to ensure all needed documentation is in place before the loan file is sent to underwriting. It is the processor's job to organize your loan docs for the underwriter.
The exact steps performed by the loan processor can vary slightly from one company to the next. It also varies based on the type of mortgage loan being used. But this is usually how it works. After this, you’ll move into one of the most critical steps during the mortgage approval process — underwriting.
Step 5: Mortgage Underwriting
Mortgage underwriting is a thorough evaluation of your personal financial information and supporting documentation by a licensed underwriter. This process enables the mortgage lender to check your eligibility, confirm the information you've provided, and determine if you are approved or denied for the loan program you applied for.
Mortgage underwriters focus on the “three C’s” of underwriting — capacity, credit and collateral:
Underwriting is arguably the most important step in the mortgage approval process, because it determines whether or not the loan is ultimately approved.
Step 6: Mortgage Loan Approval and Closing
The final Closing Disclosure (CD) will provide the exact amount of money due at closing. The Final CD is typically available a day or two before closing. The title company will send the CD to us and our Processor then forwards it to you.
Prior to closing, borrowers should receive a Closing Disclosure. This is a standardized five-page form that gives you finalized details about the mortgage loan. It includes the loan terms, your projected monthly payments, and the amount you will need to pay in fees and other closing costs.
Created on Nov 21st 2019 02:40. Viewed 486 times.
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