MORTGAGE LOAN PROCESS
Mortgage definition - in the most simple of terms, a mortgage is a loan used to finance the purchase of a home. Under a mortgage, the buyer uses the home as collateral for the loan.
The top five mistakes of first-time home buyers:
1. Applying for a mortgage with unresolved credit issues.
2. No savings for a down payment and closing costs or borrowing to cover the down payment.
3. Going house hunting before being pre-approved for a mortgage.
4. Being unfamiliar with the home buying process.
5. Underestimating the expenses involved with homeownership other than the mortgage payment
Mortgage Process:
Three Step Mortgage Process
- Step1: Getting Pre-approved
Step 2: Learning about Credit
Step 3: Banking on Mortgage
Step 1: Getting Pre-Approved
Getting pre-approved for a mortgage is a good idea as it determines the size of the mortgage you qualify for and decides the price range for the homes you can look at.
Pre-approval helps you to:
Know how much you can borrow.
Confirm your ability to qualify for a mortgage based on your credit, financial and employment information.
Strengthen your position to make an offer on a house. A seller will be more willing to accept an offer if the buyer is pre-approved.
How to get pre-approved:
To become pre-approved, you'll need to work with a mortgage lender. The mortgage lender will review your credit history, earnings information, employment history and assets. You will need to provide certain documents to the lender to verify this information. After the review, the lender will give you a "pre-approval letter." The pre-approval letter tells home sellers that you have the ability to qualify for a certain mortgage amount.
Getting pre-approved is not the same thing as getting pre-qualified. Pre-qualification simply states that the borrower qualifies for a loan based on some preliminary questions but does not commit the mortgage lender to approve the mortgage. The mortgage lender will still have to conduct a complete review of your financial situation, including your credit report and your income and employment history.The pre-approval process is more thorough. The lender does most of the work for full approval except for an appraisal and title search because there is no property identified to buy.
Step 2: Learning about Credit
When you look for a mortgage, lenders will review your credit report. Your credit report is a history of how you have managed your finances and repaid debt. It provides information on money you have borrowed and a history of your payments. Your credit history is pulled together into a credit report by three private companies Equifax, Experian and Trans Union. These companies sell your credit report to banks and other creditors so they can review mortgage and loan applications.
Your credit report includes:
A list of debts, such as credit cards and car loans, and a history of how you have paid them.
Bills are referred to a collection agency. This can include items like phone and medical bills.
Public record information, such as tax liens or bankruptcies, even if these has happened several years ago.
Inquiries made about your creditworthiness. An inquiry is made when you request credit. Many times your report will also show if you were given credit based on the inquiry.
Step 3: Banking on Mortgage
You can get a mortgage from many different sources, like mortgage banking companies, commercial banks,community banks, credit unions and other financial institutions. Mortgage brokers may be a source of information about different mortgage products available from a variety of sources. Some starting places include:
- • Your own bank or financial institution. Sometimes lenders can offer better mortgage terms to current customers.
• Real estate professionals.
• Family members, friends and coworkers.
• Internet research.
• Your local newspaper or the telephone book.
We ThanX to 123-mortgage-company.com Read more...
