08/16/2010 The process of getting a home mortgage loan can often appear confusing and complex. It's not. The loan process is actually fairly simple. Read on to find out how the mortgage loan process works, step by step.
Select a lender. This is the first step. You need a mortgage, which means you need a lender, loan officer, or mortgage broker. There are numerous lenders in the nation, and there are likely several in your local area who can assist you. Compare mortgage rates and loan terms to help you select the lender who can offer the best deal to meet your needs.
Application. Applications may require various paperwork depending on where you live and who you are working with, but your lender will gladly outline all the documentation required. The standard Fannie Mae 1003 form is the foundation upon which your application is based.
Credit check and evaluation. Yes, the lender is going to pull your credit report. Hopefully your credit score is good. If it is, you'll likely be offered the best mortgage rates. If your credit is poor, you likely won't get the best rates available. Your lender will analyze other things such as the loan-to-value ratio, your debt-to-income ratio, and your employment status in order to determine what mortgage rate you qualify for.
Underwriting. Once the lender is satisfied with your loan and you have agreed to the terms, your lender will send all the required documentation to an underwriter. The underwriter confirms that all information is accurate and that the loan is suitable for the borrower and the lender. The underwriter then approves or disproves the loan.
Rate lock. When the lender receives notification of the underwriter's approval, he or she locks in the interest rate for the borrower. The mortgage rate is now guaranteed.
Closing. The borrower, the loan officer, and the lending institution or bank will meet with a title insurance company to conduct the closing of the loan. The borrower will provide proof of identity and the lending institution will provide the funds in the agreed upon amount.
At the core, getting a mortgage is as simple as that. Whether you're looking for a VA home loan, an FHA mortgage, or a conventional loan, these steps are the most crucial steps in the process.
