Understanding the Steps of Mortgage Processing
Anyone who's ever purchased a home at the Lake of the Ozarks knows that the mortgage lending process can be a complicated and overwhelming experience if you're not familiar with how it all works. That's why this week, MHQ Mortgage HeadQuarters has decided to lay out the typical steps of the mortgage loan process so you know what to expect for your next home purchase at the Lake of the Ozarks. Take a look:
PRE-APPROVAL
One of the very first things you should do when you decide to purchase a home, is to get a loan pre-approval. This will help to determine an estimated loan amount that your lender is willing to loan to you. Not only will this help give you a budget baseline to work with, but it'll prevent you from looking at homes outside of what you can afford. Pre-approvals also let sellers know you're a serious buyer and not just window shopping. Remember: A pre-approval and a pre-qualification are NOT the same thing! While a pre-qualification may give you an idea of what a lender may loan to you, it is a very general estimate and does not hold any weight.
HOUSE HUNTING
Once you've got your pre-approval, you can begin searching for a home within your loan budget. It's typically recommended that you factor in not only the cost of the home, but the cost of taxes, closing costs, etc as well when determining the offer amount you want to put in for a home. This will help to prevent you from having to unexpectedly come out of pocket for any costs above the sale price. And there WILL be additional costs. So it's best to be prepared upfront.
LOAN APPLICATION
Once you've found the home that you want to purchase, it's time to put in your loan application for approval. Keep in mind, the pre-approval process only allows lenders to give you an estimate on what they can lend to you, and doesn't lock in your loan approval. You'll need to not only complete the loan application in its entirety, but you'll need to provide several documents to prove several things, such as your employment history, income, and your debts and assets. These documents all play a role in helping the loan processor determine your creditworthiness.
LOAN PROCESSING
Once the application and necessary documents are submitted, your loan processor will gather documentation about you and the property. They'll then review all information in the loan file and assemble an orderly and complete package for the underwriter. Here are some of the things they'll begin compiling:
UNDERWRITING
After the loan file is complete and the loan processor has all of the needed documents, the file will be sent to to underwriting. The underwriter is the key decision-maker. They closely evaluate all the documentation prepared by the loan processor in the loan package. They cross check to see if the borrower and property match the eligibility requirements of the loan product for which the borrower applied.
Underwriters review the borrower’s credit history and their capacity to repay the loan. The collateral is also weighed into the decision. They’ll sniff out any red flags that indicate potential fraud. With everything reviewed, the underwriter approves or rejects the loan, or they may approve the loan with conditions.
CLOSING
After your loan application is approved and goes through the underwriting process, your loan documents are printed out and sent to the title company of your choosing. At your closing, you'll be signing a lot of documentation - that of which will reflect your loan: closing disclosure, promissory note, deed of trust, and certificate of occupancy if applicable. When everything is signed, your participation in the closing meeting is done. The very last closing items happen in the background between the lender and the title company.
YOUR TRUSTED MORTGAGE LENDER AT THE LAKE OF THE OZARKS
PRE-APPROVAL
One of the very first things you should do when you decide to purchase a home, is to get a loan pre-approval. This will help to determine an estimated loan amount that your lender is willing to loan to you. Not only will this help give you a budget baseline to work with, but it'll prevent you from looking at homes outside of what you can afford. Pre-approvals also let sellers know you're a serious buyer and not just window shopping. Remember: A pre-approval and a pre-qualification are NOT the same thing! While a pre-qualification may give you an idea of what a lender may loan to you, it is a very general estimate and does not hold any weight.
HOUSE HUNTING
Once you've got your pre-approval, you can begin searching for a home within your loan budget. It's typically recommended that you factor in not only the cost of the home, but the cost of taxes, closing costs, etc as well when determining the offer amount you want to put in for a home. This will help to prevent you from having to unexpectedly come out of pocket for any costs above the sale price. And there WILL be additional costs. So it's best to be prepared upfront.
LOAN APPLICATION
Once you've found the home that you want to purchase, it's time to put in your loan application for approval. Keep in mind, the pre-approval process only allows lenders to give you an estimate on what they can lend to you, and doesn't lock in your loan approval. You'll need to not only complete the loan application in its entirety, but you'll need to provide several documents to prove several things, such as your employment history, income, and your debts and assets. These documents all play a role in helping the loan processor determine your creditworthiness.
LOAN PROCESSING
Once the application and necessary documents are submitted, your loan processor will gather documentation about you and the property. They'll then review all information in the loan file and assemble an orderly and complete package for the underwriter. Here are some of the things they'll begin compiling:- Order credit report
- Start verifying employment and bank deposits
- Order property inspection, if required
- Order property appraisal
- Order title search
UNDERWRITING
After the loan file is complete and the loan processor has all of the needed documents, the file will be sent to to underwriting. The underwriter is the key decision-maker. They closely evaluate all the documentation prepared by the loan processor in the loan package. They cross check to see if the borrower and property match the eligibility requirements of the loan product for which the borrower applied.
Underwriters review the borrower’s credit history and their capacity to repay the loan. The collateral is also weighed into the decision. They’ll sniff out any red flags that indicate potential fraud. With everything reviewed, the underwriter approves or rejects the loan, or they may approve the loan with conditions.
CLOSING
After your loan application is approved and goes through the underwriting process, your loan documents are printed out and sent to the title company of your choosing. At your closing, you'll be signing a lot of documentation - that of which will reflect your loan: closing disclosure, promissory note, deed of trust, and certificate of occupancy if applicable. When everything is signed, your participation in the closing meeting is done. The very last closing items happen in the background between the lender and the title company.
YOUR TRUSTED MORTGAGE LENDER AT THE LAKE OF THE OZARKS
Now that you understand the steps of mortgage processing, you'll be better prepared to get started and know what to expect when you purchase a home at the Lake of the Ozarks! So, if you're in need of a mortgage for a new home or have any questions pertaining to mortgage lending, trust in the mortgage professionals at MHQ - Mortgage HeadQuarters to have your best interest in mind. We can help you choose a mortgage program that's right for you and your specific needs!
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