Providing financial information to a lender is usually the first step in the mortgage application process. The institution will then run a credit report to determine whether the applicant can be deemed reliable to pay the note. They may then ask for a down payment based upon the amount and type of loan. An appraisal of the property and title search is done in order to make sure it is a wise investment. After the lender is satisfied all the requirements have been met, she will then set a date for closing or signing the final paperwork.
When beginning the mortgage application process, it may be necessary to spend a few hours talking to the lender. It is a good idea to bring financial documents, such as paycheck stubs or tax forms, to this initial appointment. These will probably be looked over in some detail in order to determine if the borrower has sufficient income to cover payments on the mortgage. The documents should be the most current ones available.
A lending institution will want to make sure the home is a safe investment. Once the applicant has proven financial stability, the next step in the mortgage application process is to look the house over carefully. During this phase, an inspection and appraisal are usually completed. The appraisal verifies the home's value, and the inspection can uncover structural or repair issues.
Once the home has been appraised, the next step in the mortgage application process is to perform a title search. This is normally done by an attorney. A title search verifies ownership history, that zoning requirements are met, that no liens are against the property, among other things. If a problem is detected during this process, the situation may need to be litigated before a mortgage can be approved.
After all the steps have been completed, the property will then go to closing. This is the final step in the mortgage application process. During this time, the mortgage agreement will be signed and closing costs will be paid. The borrower may take possession of the residence at this time or shortly thereafter, depending upon the agreement.
In most cases, the mortgage application process is tedious and lengthy. Even so, each step is important as it protects both the borrower and the lender. Knowing what to expect before submitting a mortgage application can help alleviate some of the anxiety associated with this process.