Mortgage loans are probably the most popular while it comes to myriad options of home loans available. Through several states have certain rules and regulations applicable, but there’s a patent rule that is followed throughout. Read the following post to know more about the process of mortgage loan lending
What is Mortgage Loan?
A loan that is secured by real property through the use of mortgage note is referred to as mortgage loan. The mortgage note stands evidence to the existence of the loan and the most importantly it is the mortgage that secures the loan. However, the word mortgage is usually used to mean mortgage loan. Mortgage loans have a crucial role to play in the home hunting process; from searching for the best option available in the market to completing the rounds of paperwork. So, how does one go about applying for the same and what are documents that you need to produce in order to avail the mortgage loan.
Borrowing a Mortgage Loan
Getting pre-qualified for a mortgage loan is quite simple. Here’s what you would require:
- Applicant’s name
- Address proof for each applicant
- Social Security Numbers
- Authorization in order to request each applicant’s credit report
- A credit card number and its date of expiry to charge you the exact cost of your credit report
Now, remember that pre-approval is always a better choice. With this process, you end up filling up all the loan paperwork as if you already have a residential property in mind. After determining this, the lender follows the procedure to get you approved a specific sum of money. However, do remember that the pre-approval is good for a short span of time, normally a month (30 months), before you will have to go through the entire process all over again.
The advantage of acquiring a pre-approved is that it permits, you to close on a house as soon as possible. If there are several bidders on any one property and also being pre-approved can make the difference for the seller on who to choose. However, remember that the process is long, time-consuming and involves great amount paperwork. So, it is very essential that you should take this matter seriously and complete it with every meticulous step that is required.
Credit check is one of the first things that your lender will do. They do not usually waste time in the process if you do not qualify on your credit score. Even if your scores do not spontaneously disqualify you, it might harm your chances to secure a major rate of interest. You will have the chance to explain the lender and explain your situation as to why do you have a lower score. It is always good to mention your situation beforehand to your lender.
It goes without saying that, the process of mortgage loan requires a lot of paperwork. As an applicant you need to make available your W2 from the previous two years. That should be accompanied by the documents related to tax returns of those two years. You will also need to submit proofs pertaining to any secondary income that you have. Evidence of credit and bills that you owe will also be taken into consideration. This might include auto loans or personal loans. Also if you have made investments you need to provide evidence for the same as well.
Though the requirement for the paperwork might differ, but you can save time if you have all your documents ready.
The lender might ask for an appraisal to ascertain the value of the residential property. This will give them a chance to them to figure out how much you would like to borrow if your home loan in approved and also how much can they offer you as a down payment. It will enable you with the information that if the asking price exceeds the value of the residential property. Most moneylenders or financial institutions will most likely ask for a proof in order to determine the value of the house. Once it has been determined, it will permit them to know how much they can offer you in amount and what you will have to pay as down payment.
This might sound a little off beat; it is the order of the law to provide the borrower with good faith and that also within three days after you have applied for the actual mortgage loan. This estimate will inform you what exactly to expect as a sum of money at closing. These fees serve a dual purpose; they partially deal with the loan application process and also partially for the costs that are related with the entire mortgage home loan process. Some of the fees that you might expect to be included in the list:
- Appraisal of Property
- Credit Report Fee
- Lender’s Inspection
- Mortgage Insurance Application
- Loan Processing Fee
- Loan Application Fee
- Underwriting Fee
- Title Search or Abstract
- Preparation of Documents
- Mortgage Insurance
The expenses of these normally range between three and five percent of the price of the house and may be required to be paid in cash rather than any other form.
Author Bio: Sampurna Majumder is a professional writer and a passionate blogger. Currently she is writing content for several websites including 99acres.com that cover latest trends related to real estate market in general.