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The Mortgage Loan Process
Pre qualification is a process in which you work with a loan officer to determine how much of a payment you can afford. From that information, the loan officer can determine your loan amount. The discussion involves your gross income and expenses. The pre qualification process by no means is an approval for a loan. It is more a way of determining a ballpark amount for what you can afford to borrow.
Pre approval process is a more formal process. Information is collected that will verify your income, assets, and expenses. For example W-2’s and pay stubs for income, bank statements and investment statements for assets and a credit report for expenses. From this information a loan officer can determine more precisely what loan programs best fit your needs and how much you can afford. The information is submitted to a lender’s underwriter for an official approval of a loan amount. The underwriter is looking to determine if your financial picture fits within the guidelines of the program that you and your loan officer have chosen. If the loan officer has done his home work correctly, the underwriter will say the loan fits the guidelines and you are approved.
A side note, credit scores have become a very important part of the loan process. A great majority of loans require a certain credit score. It cannot be emphasized enough, that you need to be diligent about taking care of your credit.
After a contract is accepted for the purchase of a home, an appraisal of the property is ordered, to determine if the purchase price is at least the value of the property. Assuming the appraised value is for at least the purchase price and we have met all the guidelines for the program, we can proceed to closing.
Closing is the process when you become the owner of your home. A number of legal documents are signed the most important of these are the settlement statement, the note and the mortgage. The settlement statement breaks down all the costs associated with the purchase of your home. This statement also determines how much money you need to pay after the loan amount is subtracted from the purchase price and expenses. The note obligates you to pay back the loan you used to purchase the home. The mortgage places a lien against your new home and is filed with the county.
After the closing you are now the owner and all the responsibilities and benefits of owning a home are now yours.
For information purposes only |
