Buying a home is a major milestone in life, and the process of obtaining a mortgage loan can be daunting. But with the right knowledge and preparation, you can make the process much smoother. In this article, we'll take a look at all the steps involved in processing a mortgage loan, from pre-approval to closing. The first step in the mortgage process is pre-approval.
Mortgage pre-approval gives you an idea of how much you can afford so that you can buy homes within your budget. Pre-approval is different from prequalification, as it requires more documentation and verification of your employment, income, and debts. A loan commitment takes pre-approval one step further because you have full financial approval. Once you have provided the required documentation to your lender for pre-approval and your information is verified, you will complete your loan application.
After you submit your loan application, a processor will review it to make sure it's complete and accurate. During or after the loan is processed, your lender will request an appraisal from an impartial, licensed appraiser. Your loan agent will contact you if you need additional documentation, so be sure to stay in close contact during this period to ensure that the loan processing is on track. Before closing the house, you and your lender will usually decide whether or not to set your interest rate. Because mortgage rates can fluctuate several times a day, a mortgage rate lock ensures that the interest rate remains the same until the closing date or 30 to 60 days after the lockdown takes effect. You can expect to pay between 3% and 6% of the total mortgage amount in closing costs.
Your closing costs may include appraisal fees, discount points, loan origination fees, inspection fees, and more. Closing costs can represent a large part of the initial cost of a mortgage loan, so be sure to consider them during your financial planning. Your lender will likely need another 1 or 2 weeks to finalize your mortgage loan and set the closing date. Three days before closing, you will receive a closing statement with the final details of your loan. On the day of your closing, you will have to sign several documents.
Once signed, you will receive the keys to your new home. Don't hesitate to ask any questions you need during the closing process to make sure you fully understand what's going on and what you're signing. For most lenders, the mortgage loan process takes six to eight weeks. However, closing times can vary quite a bit from lender and type of loan to another. Banks and credit unions usually take a little longer than mortgage companies.
In addition, a high volume can alter spin times. It can take more than 60 days to close a mortgage during busy months. The good news is that once your loan has been conditionally approved, you'll basically be in the home stretch. Our goal is to have your loan application approved and closed in just 10 days. You should be able to sign the deed to your new home 72 hours after receiving your CD. Let's take a look at some other factors that could affect how long it takes for your mortgage loan to be processed:
- The type of mortgage: USDA and FHA loans come with mandatory mortgage insurance that will increase your monthly mortgage payment.
- The unusual aspects of a loan application: spikes in workload or complex applications can cause delays.
- The lender: some lenders offer more than just standard pre-approval which could speed up the process.
The rates on USDA and FHA loans also seem low at face value, but remember that these loans come with mandatory mortgage insurance that will increase your monthly mortgage payment. Your mortgage could be approved on the condition that you provide more information about your credit history or other documents related to your application. There are a wide range of mortgages to choose from, so make sure you understand all aspects of each one before making a decision. Calculating the monthly cost of your future mortgage can also be difficult due to all the variables involved such as interest rates and taxes. Your mortgage advisor collects and verifies all the documents necessary to prepare the loan file for underwriting. At this stage of the mortgage process, there's always a chance that your loan will be declined until you're funded and you've closed your mortgage. However, applicants who are familiar with every step of the way are better positioned to have their application processed as smoothly as possible. Once everything seems to be in order, you'll sign to accept the mortgage and leave the office with the keys to your new home!.