Once you have found the home of your choice, you may think that your shopping days are over. Actually, only the first phase has been completed. Next comes to finding a mortgage and payment terms that fit your budget. You might start by looking for a mortgage at the bank where you have your checking or savings account. But don’t limit yourself. A wide variety of institutions make home mortgage loans, including savings and loan associations, commercial banks, mutual savings banks, and mortgage companies. The mortgages these institutions offer will have varying features. One way to find the creditor or lender with the most attractively priced loan is to look in your local newspaper.
The mortgage application process is where you fill out the application properly, sign various forms that authorize the lender to process your loan, and deliver your documentation requirements. (Bank statements, Letter of Introduction, some case pay slip required (For salaried person), Trade license and other income related document for Businessman and evidently all the collateral related documents are required. You should understand that the next process cannot begin until these documents are completed or received.
When all of your documentation is received it then goes to a processor who verifies and validates all of the information to be true and correct. Verification requests may be sent to your employers, mortgage holder/landlord and lending institutions. This is done by fax or phone when possible. It is usually during this time frame that the appraisal and the title policy are ordered.
When all the information is collected the processor then verifies that basic lender loan requirements have been met. The file is then packaged in a manner the lender specifies. The completed package (including the appraisal and title report) is then sent to the underwriting department either in house or to a lender-specified location.
The processing of your loan usually takes about one to two weeks but it can often be delayed when third parties do not respond to the validation requests or appraisals are delayed. If your loan qualifies for DU (Desk top Underwriting) or Loan Prospector, these are computer automated systems, the documentation requirements are often cut in half and the process can be completed in three to five days depending on the volume of loans the processor has.
The underwriter evaluates your loan package to make sure it conforms to all the guidelines required for that mortgage loan. They also analysis the appraisal and title report and may do additional validation of employment, mortgage payments, and credit and anything else they feel is necessary to document your loan. They have ultimate power and decision authority over the approval of your loan. The time required to do this is driven by the volume in the market. If the market is flooded I have seen it take two weeks but under normal conditions it only takes three to five days.
When everything is scheduled the lender then draws the document package and sends it to the closing company. This can be done by overnight delivery, fax, or electronically. It can take two days or more. You meet, sign the papers, and pick up the keys..