Steps to getting a mortgage loan: An overview
If you want to buy a home for yourself on loan, you should have some prior knowledge about the steps involved in getting a mortgage loan. It will help you to know how your loan application gets approved and you become qualified for the loan.
Steps in getting your loan approved
Generally the mortgage approval process includes the steps mentioned below:
- Prequalification process: This process helps the lender to get a view on your financial situation. The lender will see whether or not you are capable of repaying the loan and how much creditworthy you are. He will want to know how much loan you want to take and the approximate cost of the house you intend to buy. He will also question you about your income, job, credit history, etc.
- Mortgage application: Based on the prequalification process, the lender will decide whether or not you are a good candidate for a mortgage loan. If he finds you suitable enough, he will proceed with the application process. You need to fill out some papers related to the mortgage application. You have to decide the type of loan you want to take (it can be a fixed rate or an adjustable-rate or a hybrid), you need to decide the loan term and have to lock in the interest rate for the loan. You also have to decide how much down payment you can make. If it is not enough, you need to buy private mortgage insurance. You also need to pay application fees to the lender.
- Review of documents: After you have completed your application process, the lender will review your documents, get your credit report from the credit bureau and check it, verify your employment, etc. If everything is satisfactory, he will proceed on to the next step.
- Appraisal of property: After the lender finds all your documents and other factors satisfactory, he will send a professional appraiser to evaluate the house you want to purchase, to ensure that, it is worth the amount it has asked from you. This is done to ensure the lender that, in case, in the future you are unable to repay the loan, he gets back his loan value by selling the house.
- Getting approval for mortgage: After the home appraisal, you need to pay the fees towards closing costs and other charges like, insurance and tax and finally get the loan to buy your dream home.
Getting yourself approved for a mortgage loan is a time consuming process. However, if you maintain honesty in furnishing your financial and personal details and cooperate with the lender, the process becomes much simpler and makes it easier for you to own your home.