A mortgage loan process can be intimidating, but it doesn’t have to be. In this blog post, we will talk about the application process and all of the steps that go into getting a mortgage cleared to close. We’ll discuss what underwriting is, as well as how you can prepare for it.
Step one – Taking the Application
The application process is one of the first steps in financing a mortgage. There are many different lenders that can help you finance your home, so it’s important to do some research and make sure you’re working with someone who has access to the best loans for you.
To get started on an application, there are several documents that will need to be collected from all involved parties: this includes the borrower (including their spouse or partner), any co-signers, contractors/builders if applicable, and anyone else who may have been contacted as part of the loan process.
Once these items have been gathered together – along with any other information requested by your lender – they’ll want copies of them in order to verify everything before moving forward.
Step Two – Running Your Credit Report
Your credit report and FICO score are one of the most important parts of your mortgage application. Your credit score is one measure that lenders use to help determine if you’re a good borrower and responsible person who won’t default on their debt obligations – so it’s important to know what your current FICO score is before applying for any type of loan, let alone the largest single purchase most Americans will make in their lifetime: buying a home.
The main three criteria used by mortgage underwriters are
– Payment history (35%)
– Debt utilization ratio (% total available balance)
– Length of time since last late payment or delinquency (15%).
A bad credit score can have an impact not only on whether you’ll be approved for financing but also the interest rate you’ll get.
You Don’t Need Perfect Credit
Many people believe that you need perfect credit to get a mortgage. But that’s not the case, as long as your credit score is in a high-enough range.
If you have good or excellent credit (a FICO score between 720 and 850), then by all means go ahead and apply for a mortgage with confidence. If you’re below this level but still within striking distance (between 600 to 750) of perfection, then it might be possible if there are other factors like strong income levels indicating stability.
But what about someone who has less than perfect credit? In some cases they can qualify for an alternative loan product from their lender – such as a rehabilitation program where borrowers work closely with counselors over several months on rebuilding their personal finances.
Step Three – the Automated Underwriting System
The automated underwriting system allows us to process the borrower’s application and compare it to industry standard guidelines for qualifying borrowers. Some of these factors include things like credit score, debt-to-income ratio, etc.
If this process gives us an indication that we should proceed with a denial or approval decision then our underwriting team will take over from there – discussing all of the loan details in order to finalize one of four outcomes: Denied, Approved With Conditions (requires some extra steps), Approved Without Conditions (just needs signing) or Rejected.
Step Four – Submit to Underwriting
Next, we submit the loan to the lender’s underwriting, whose job is to take the file, the supporting documents and the AUS results and make a decision on the loan.
If there are any issues with the application, then we will know before it gets to underwriting which means that only qualified loans go through this phase. Once all of these conditions have been met and everything is approved by our underwriter, the customer can sign their documents – when they do so, they’re committing to pay back what’s owed out of pocket if something were to happen at a later time (which is why we require collateral).
Step Five – The Appraisal
The property need to get inspected by a certified appraiser to determine the value of the home using local comparable properties. The appraiser needs to get information from the borrower to make a full appraisal.
The appraiser will create an inspection report which looks at things like measurements, features and condition of the property as well as any improvements or additions that may have been made in order to get an accurate representation of value for insurance purposes. This is then sent off to our underwriting team who do their own due diligence before deciding if it’s worth lending on.
Last Step – Loan Approval and Signing Documents
Once the underwriter has approved the file and the appraisal, it’s time to sign docs. The Loan Officer will provide the borrower with a set of detailed loan documents for review.
The following are key points to remember:
– Understanding your monthly payments and mortgage balance before signing on, so you know what kind of payment plan works best for you.
– Checking that all information is correct, including name, address and account number in order to avoid any errors – it’s important!
– If there are discrepancies or missing items from the documentation package then we can get them fixed.
The mortgage loan process is a complex one, and there are many steps that go into underwriting before an appraisal can be scheduled. But don’t worry! We’re here to help walk you through every step of the process so your experience will go as smoothly as possible from start to finish.
I’m Your first Call.
Your first step should always be to talk to a mortgage professional. Schedule a time speak with me today, it doesn’t matter if your’e already under contract, or if you are buying until next year. I need to make sure we get you ready, and that you’re doing the right things today, so when you do make an offer, you are all set. I see too many people that take advice from the internet or non-professionals and mess up their chances to buy.
Talk to Jesse – Mortgage Expert: click here to schedule a time to talk.
My name is Jesse Rivera. I’m licensed in the State of California and I live and work in beautiful Long Beach, CA. I can do loans for the whole state of California, but I specialize in SoCal, especially Long Beach, Los Angeles County and Orange county.
Working with a Mortgage Broker (instead of a bank or retail lender) has its benefits.
- My rates are hard to beat. As a mortgage broker, I have a lot more flexibility on how I price loans, and often lower my compensation to get my borrowers a better rate, or money for closing costs.
- I work with over 100 lenders and have a lot more available programs, so can often get a loan done when other lenders can’t.
- I can close a loan in 3 weeks.
- In this market, I have some great strategies to get your loan accepted, and help with low appraisals. My buyers are great success.
- I used to be a high school math teacher, so my emphasis is always education. My goal is to let you know what is going on, what’s coming next, and why it’s happening and important. Communication is my greatest tool, and I use it liberally.
- I work weekends!
Don’t take my word for it, check out my reviews: Jesse’s Google Reviews
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