Applying for loans can truly be tedious process. One needs a good financial background and a steady income to qualify. Let us walk through the different steps of a loan application. This should help you know what to do when the need arises.
Step 1: Pre-qualification
This step occurs before the actual loan process actually begins. The financial institution gathers information about the borrower’s financial background. It tries to determine how much money should be lent to the borrower. Based on the health of the borrower’s finance, the financial institution determines how much he will be able to pay. Institutions have a way of finding out these kinds of necessary information. Don’t even bother lying about you credit history or whatnot, because they will surely find out,
Step 2: Actual Loan Application
Application is the beginning of the loan process. The borrower completes a few documents with the loan officer. He supplies all of the information needed to transact the business. The different fees and payments are explained, as well.
Step 3: Processing
In this step, the borrower’s credit and payment histories are reviewed. A written explanation will be required of the borrower if the lender finds poor performance. Possible property issues are also considered.
Step 4: Underwriting
The underwriter reviews whether one is qualified to take finance loans. If there are problems, the loans are said to be “put in suspense”.
Step 5: Mortgage Insurance
Mortgage insurance is necessary when the borrower does not have enough money for a down payment. When this happens, the loan is passed on to a mortgage guaranty insurer.
Step 6: Pre-closing
This is the part when the title insurance is ordered. All loan details are finalized as well.
Step 7: Closing
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