Knowing the Process to Obtaining a Mortgage
The entire mortgage process can often be very stressful for borrowers, especially if they have never been through it. Many become overwhelmed and frustrated with the process and the details that it encompasses. The way to get through this is by knowing in advance the process to obtaining a mortgage.
1. Be prepared with all of the necessary documentation; lenders require that certain documentation be submitted for examination. Being prepared means having it all ready, even if it is not requested. Lenders want to see two complete years of W2’s, one month of recent pay stubs, two years of tax returns if self-employed, two months of recent bank statements, recent 401K or other financial statements. Have ready the phone number and contact for employment and landlord if renting. For a home purchase, a copy of the signed real estate sales contract is necessary. For a refinance, a copy of homeowner’s insurance declaration page, the recent real estate tax bill, previous title insurance documents, and survey if changes to the property have been made. Have the documents ready and available for any unusual circumstances, such as child support or bankruptcy.
2. When completing the mortgage application, make sure that the form is fully completed with up to date information. Two full years of residence and employment are required. For the newly employed who were students, school transcripts will be necessary. Debts that do not appear on the credit report should be told to the lender and relevant documentation submitted. Remember that it is a requirement of the law to be honest and upfront on a mortgage application.
3. The loan file enters processing once the application has been completed and the documentation has been submitted. At this point, borrowers may receive phone calls requesting additional information or clarification for something that is found. This occurs because, upon examination of the documentation, the processor may see something missing or something appears to cause question. Being prompt in responding will keep the loan from being delayed. The loan cannot move on until any issues have been settled.
4. When the loan has cleared processing, it will be examined by an underwriter to make sure everything is in order. Since most loans have gone through automated underwriting and have received approval, this step is usually quick. It is at this point that the final approval is given along with stipulations (conditions) for closing.
5. After the underwriter has signed off on the loan, the closing documents are prepared and arrangements are made with a closing agent for a closing date. Many closings today take place at home with a notary assigned by the lender or closing agent.
The most important thing that borrowers can do is to be prepared ahead of time by knowing what to expect. This will prevent a lot of frustration that can come along the way during the process. Patience and cooperation are the keys to success when obtaining a mortgage for the first time or multiple times. Each mortgage is uniquely different at each time period and with each borrower.