What are the Six Distinctive Steps of the Mortgage Process

You want to purchase a home. A loan is something that provides you a smooth buying experience. Planned to take a loan but don’t know the steps to make this a done deal? The process can be confusing both for first-time buyers or experienced homeowners. We’ve created this useful guide to help you through the different phases in a Mortgage Loan approval process. Hope the information will guide you from the start of the journey to its near end.

Have a Look at Series of Steps Involved in the Mortgage Process

Before going to take a loan, it is essential to learn the overall loan mortgage process starting from pre-approval to closing.

Mortgage Pre-Approval

The lender first wants to know the reason why you want a loan. The pre-approval of loans doesn’t take much time; it involves the credit score and credit history by the lenders. They see your payment history and lines of credit from past and present. Then they decide to lend you a loan amount for which you qualify.  

The approval signals to the seller that you’re actually buying. This is the phase you can negotiate the deal and be ready to go in a hot market.

Mortgage Pre-Qualification

In this stage, the lender looks at the credit and capacity of a borrower to Repay a Mortgage. They usually ask basic questions like - How is your credit.

Organize Documents

Gather all the essential documents you require during the process. You’re required to hand over all your important papers to the loan officer.

House Shopping

At this phase, you start communicating with a buyer’s agent and view homes.

Search for Houses Online

Online shopping is the trend today. You can search for houses of your choice based on the loans you’re approved. You can even negotiate down to a price after having a good understanding of the market.

  • Go for the most up-to-date listing.
  • Look for professionals to make a decision.

To get accurate pricing, you need to have a complete understanding of the local market, up-to-date information, and all agent-listed inventories.

Make an Offer

When you selected the home you want, make an offer. There are some conditions you need to satisfy before the deal is complete.

  • Appraisals must be close to the loan amount.
  • Borrowers obtain final loan approval.

The deals approved by both parties must be signed by both the buyer and seller.

Mortgage Loan Application

After you have been approved, found the home of your choice and the seller has accepted your offer, the next stage is to go for a mortgage loan application. This is a straightforward process in which almost all the lender follows the same standardized. The process involves information regarding the property being purchased, the type of loan, and the important information about the borrower. You can apply for a mortgage loan online. The Lawhorn Morgage Company deals in providing various types of loans.

Mortgage Processing

 After you complete the loan application, the next step is the broader loan approval process. In this phase, the lender collects the required documents as well as the property being purchased. They will review the documents such as bank statements, tax records, employment letters, and the purchase agreement for the underwriting process.

Mortgage Underwriting 

This is the phase in which the loan documentation gets examined by the loan processer ensuring it complies with lending requirements and guidelines. The underwriter double-checks the eligibility requirements, or they can reject the loan if it fails to meet the pre-established criteria. They mainly focus on:-

Capacity – They check your income history and total debts to find if you can repay the mortgage loan.

Credit – What is your credit report and scores?

Collateral – Examine the current market value of your property. They use a home appraisal report to find it.

Mortgage Loan Closing

When the lender examines everything and gets satisfied, the loan comes “clear to closing” stage. This is where all the requirements are checked – in short, it’s the final stage where the deal is done i.e. closing. Prior to the final closing stage

  • All the supporting documentation will be sent to the company that is handling the closing.
  • Both the buyers and sellers need to review and sign all the documents.

Prior to the final stage of closing, borrowers need to have a closing disclosure that is five-page from explaining the mortgage loan details. This document includes the loan terms, monthly payments, and the closing costs.

Conclusion

Expecting all the conditions met, and the documents signed, all is yours. After the successful completion of all the above phases, you’re all done to buy your dream home.