Choosing, buying, or building a house is already stressful, and nobody wants to be bothered with any hindrances when it comes to loan approval. But the harsh reality is that it’s quite challenging for the mortgage loan to be approved when the required steps are not followed.
Five essential actions to ensure loan approval is as follows:
Steps To Getting Approved Mortgage Loan Application:
If it were a decade earlier, pre-approval for any loan would not be necessary because all the lenders were lending money to almost anybody. But today, it’s quite crucial for the real estate agents to ensure if you’re capable of getting a loan. If not, they’ll prefer investing time on another client.
Pre-approval isn’t a time-consuming process but needs some specific details. You will need to present your credit report showing your credit history and credit score for lender’s reference. The lender will evaluate if you’re capable of paying back the amount you mentioned in the loan application.
2. Loan Application
Now, it’s time to gather all your essential documents. All the information necessary for loan application will be collected over the phone, online or from your documents. The list of documents might seem a bit lengthy, but it’s not difficult to arrange them.
Here is the full list of required documents:
- Employment documents
- Income statement
- Type of mortgage
- Assets you own
- Loan amount
- Current debts
- Information on the property that you plan to buy
- Explaining the financial errors (bankruptcy etc.)
3. Loan process
A borrower’s job is almost done when he submits the documents for mortgage loan application. Now, your financial institution will be running their operation for approval or rejection of the loan themselves.
All the documents that you’ve provided will now be arranged accordingly in a file for the underwriter to review them. For example, if you’ve not already submitted the credit history, they will arrange it. They will verify your employment information and background and attach the report in the file. Property inspection and appraisal will also be done during the process before your file reaches an underwriter.
4. Underwriting process
Underwriters are the only decision-makers. They analyse your ability to pay the loan on time and decide if your application shall be rejected or approved. The underwriter cross-checks every document that the loan processor has attached in the file until he is sure. He will see if you and your desired property match the eligibility criteria for the loan. Notably, the collateral is considered to be an essential deciding factor.
Underwriters are trained to identify fraud or inability of the borrower to repay the loan amount on time. The underwriters at times even approve the mortgage loan with the additional requirement of an explanation to a specific loophole present in the submitted documents.
The meeting is held once the documents are printed and sent to the attorney’s office. A massive stack of documents comes along when the closing meeting is being held. One such document is quite essential and is known as “closing disclosure”. This document will confirm all the costs mentioned in the loan estimate. These two documents are pretty similar as the law suggests them to be. It’s like a countdown to your successful loan application. You can go through the property documents and make sure that the details submitted by you match with those mentioned in the documents. Once you approve of the closing disclosure, the deal will be sealed shortly with signing of a few documents.
These were the five crucial steps that need to be followed by every borrower to get his approved mortgage loan. Each of the steps mentioned is not just an option but a necessity to successfully be able to buy the house you want.