Home Loan Approval Process

Applying for a home loan can be smooth or challenging; the nature of the outcome depends of a buyer’s preparedness. Though the nuances of new home-buying process are never without a few surprises, perform your due diligence and learn what you need for a smooth loan approval.

Mortgage Approval Process

All documentation, including your social security details, credit report, pay stubs, W-2 statements, proof of income and other information required by your loan representative will be forwarded to the loan underwriter along with mortgage prequalification application.

Terms Of Underwriting

Mortgage underwriting is the process that assesses the risks of lending. For most underwriters, these terms will fall under:

  • Credit:This includes your entire history of building up and paying off debts, including any previous mortgages, credit card dues, etc.  A strong credit score helps getting a flexible mortgage rate.
  • Capacity: Based on your credit history, your lender will determine how well you can pay off debts.
  • Collateral:This is any previously owned property you put up to protect the lender when buying a new home.

In the meantime, you can make an offer for a new home. However, you will have to submit the details of your loan to the seller, as the success of the home purchase is tied up to the approval of your mortgage loan.

Choosing The Loan

Different loans apply to different homebuyers. For instance, the minimum down payment on the FHA loan may be as low as 3.5 percent, but only with a high credit score. The certificate of eligibility (COE) is a necessary part of a VA loan application. Besides your own financial strength and the value of your property, check for such specifications before selecting a loan.

Rehab Loan Requirements

The loan for a property that needs additional repairs to become livable include property plus repair costs. The FHA 203K Rehab Loan Program is the ideal type of financing in this case.

In addition to standard loan application information, you need to provide details the repairs your home needs, including the extent of repairs and the costs involved. Once approved, these costs will be incorporated in your loan terms. The lender will invest these in an escrow account, and control these to pay off work completed by your contractor after loan closing.

Mortgage Closing

This is when all loan costs are confirmed, the seller is paid off by your lender, and all mortgage payments agreements between you and the lender are finalized and sealed.

It pays to a reliable mortgage broker, who can guide you through each step of financing your dream home. You’ll find this expertise here at Mortgage Scenarios.

Let’s get you a quick approval!