A mortgage loan is a loan secured by a mortgage in real property. The term “MORTGAGE” refers to the legal security. However, these two terms are commonly used interchangeably today to refer to mortgage loan. So generally, a mortgage loan refers to the loan that is secured by residential property. As compared to other forms of borrowing, a mortgage loan is lower in price. This is because the property’s value reduces the risk for the lender.
Mortgage loan processing is a series of steps completed in a period of six weeks to maximum of ten weeks. The procedure is very intricate for all the parties involved. The processor of the mortgage loan oversees all the processes while the borrower adheres to the lender’s instructions.
If you want to get a house loan for buying or building a house, then you should know how to go about it. Though the steps set by most lenders are generally the same, you still need to check with your lender and see if they have unique standards. Generally, there are four steps involved in the process and they are explained below.
This is the very first step in mortgage loan processing. Once you have located a suitable lender, you need to fill out a loan application form with them. The good news is that you can now apply for it online which is the fastest and more convenient option for mortgage application.
Make sure to fill all the required information as honestly as possible. When you’re done filling up, submit it to the mortgage processor. The processor will then immediately contact you to instruct you of all the necessary documents you need to deliver. These documents may include income tax returns if you are self-employed, recent bank statement, W-2 forms and pay stub. Usually, the paper work is sent by mail which may cause delay to the Mortgage loan processing.
Verification of the Document Information
This is the point where the actual processing will begin. Once that all the necessary documents have reached the processor, all the information you have stated in there will then be verified critically to ensure they are genuine. What verifiers usually do to verify your information is call your landlord, bank, employer or other entities that are featured in your documents. If you have fulfilled all the requirements, you will pass the pre-approval step. The Mortgage loan processing overseer will then send all your files to the lender. At this step, the title report and the appraisal processing will begin. It generally takes 14 days for the lender to validate your documents. But it will be executed faster via their automated system if your house loan is eligible.
Underwriting the Loan
The approval process happens in this stage. Here, the underwriters once again validate your documents. Sometimes they will also need to request for your credit report. This is also the stage where appraisals and title search reports are done. It is the underwriter who has the maximum power whether to approve or reject a borrower’s application. When a file is approved, it is returned to the loan processor together with a pre-closing statement. And if it is rejected, it will be returned to the mortgage loan processing department together with a statement of denial. The loan officer and processor review all the denied files once again. They will see if they can still help the owner. Nowadays, automated underwriting is in vogue. Such requires less time and less paperwork. It is the computer that disqualifies or approves a file. The underwriter’s only job at this point is to manually check the document if there are possible problems.
The Closing Stage
The loan execution will be sent to the closing stage if the mortgage loan processing and the underwriting department are both happy with your file. The closing stage will be initiated with all the conditions that are stipulated by the underwriter. In just a short period of time, you will get a loan commitment from your lender to set the date for the loan closing. To make this decision, you may need to consult with a property seller. And before it closes, you need to compare the charges stated in the Good Faith Estimate statement and Settlement Statement.
Bonus Tip – Getting Mortgage Cover
If you are looking to borrow loan for your home, also consider buying mortgage insurance which will make sure that your home stays with your family after your death. Mortgage insurance provider will pay your mortgage in such circumstances. Check out Pinnacle life website for more details.