Making Sense of the Mortgage Loan Process

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Getting a Mortgage Loan Approval

Thinking of purchasing a home? Most likely you will need a mortgage loan for financing. If it’s your first home, you may not know how to go about getting your home loan approved. Since REALTOR® are very familiar with mortgage lending practices; loan programs can be a tremendous help in directing you to a reputable mortgage lender.

After you decide on a lender, getting your loan approved depends on how well your income, assets, and credit profile align with banking and government agency guidelines. These guidelines are a set of standards aimed at minimizing the lender’s risk and make lending practices consistent for all consumers.

To get your loan started you will need to complete a home loan application. This is usually done online through the lender’s secure portal. Once completed the lender will assign you a loan processor to collect your income, asset and employment documentation which consist of the following:

  • 2-3 months of your most recent bank statements
  • 30 days of your most recent pay stubs
  • 2 years of your W-2s if you are salaried
  • 2 years of 1040s if you are self-employed

Once received, the processor submits your documentation to an underwriter to obtain a conditional loan approval, also known as borrower’s approval. When this stage is completed the bank will issue a letter that outlines the terms of the approval that can be used to show a seller that your financing is in place.

After you have a home under contract, the next step is to obtain “property approval”. For this step the processor will complete the following tasks:

  • Order an independent appraisal to determine the property’s value
  • Request title insurance to insure you have clear legal title to the property
  • Contact the HOA to make sure there are no outstanding dues, fines and violations
  • Secure a survey to make sure there are no property boundary issues

To obtain a “final loan approval” both the property and borrower’s documents are submitted back to the underwriter. If everything is in order the underwriter will issue a status called “clear to close”. This status means your closing documents can be prepared for you to sign and complete the purchase of your home.

If you are interested in getting prequalified for a home loan or just want a consultation without obligation, click here.

Al Denson, REALTOR®

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