From Debt Into Retirement

If you are in the process of securing a mortgage loan, or you are considering purchasing a home, it is important to understand the mortgage loan process. With so much money on the line, and loan contract that can last anywhere between twenty and thirty years, this process can be very involved and one of the bigger financial decisions you will make in your life. Understanding the steps involved in mortgage loan processing will give you an idea of what to expect so that you are fully prepared for the weeks and months ahead. Before you decide to apply for a loan there is some prep work you should perform to ensure you receive the best deal possible.

Before a potential borrower applies for any large loan, they should check the market for current interest rates, review their credit report from all three bureaus and begin shopping for the best mortgage lender possible. The decision of a lender will be an important one, as some lenders will have higher fees, lock-in policies and terms depending on the institution and underwriter. In this turbulent real estate market, not only are sales prices fluctuating, but also interest rates. It is no surprise that from the time you begin the mortgage process, to the time you sign escrow, the interest rates will have either risen or fell depending on the county’s economic state.

Filling out the initial application is the first step to begin mortgage loan processing. Once you have chosen the right lender and broker who are trustworthy and experienced, you will be asked to fill out a mortgage application, which discloses your employment information, income, assets, banking information, monthly expenditures and all other pertinent information needed by the lender. It is very important to honestly answer all questions as the information will be verified and any false material representations can lead to a denied application. The application process is important, as it will assist a lender in determining how much risk a borrower poses.

Once all your information has been disclosed, it will be forward to loan processing. During this process, processor will ask borrowers to provide all of the necessary documents as proof to statements on your application. Depending on the lender, some will require the originals rather then copies, do it is important to check with your broker on which documents will suffice. At this point, if their is false information provided, the lender can decline your loan without returning any down payment or fees paid for the loan application processing.

In most cases, mortgage approval is referred to as conditional approval. This means that the lender meets credit and income guidelines and must provide information a satisfactory appraisal and inspection of the property for a final approval. At this point, it is important to find your dream property and complete all of the inspections of electric and plumbing. Believe it or not, these inspections can be a lifesaver for you and the lender in properties with mold and significant damage that is not visible to the naked eye.

Mortgage loan processing can take weeks to months depending on the conditions that must be met by the bank. If a property is in the process of being constructed or needs to be repaired prior to a final approval, it will take much longer then a straightforward conditional approval.

It is important to be patient when looking for a lender, broker and home. Jumping into the first property may not be the best choice, where there are many luxury homes on the market today at a very affordable price. For consumers with good credit and moderate income, this is the right time to buy. In this buyer’s market, borrowers can find low interest rate loans and low sales prices for the best overall purchase.