The Mortgage Application Process
Often times the mortgage application process can prove to be over whelming
. With several types of paper work needed, it can be confusing and stressful for the home buyer. A few of the paperwork types are, the mortgage application form itself, employment records of the buyer and paperwork on the property the buyer desires. Also needed in the mortgage application process is proper documentation, which provides detailed information about the home buyer's finances.
This helps the lender gage the applicant's ability to pay. While continuing in the mortgage application process, the lender will also examine the credit report history of the buyer. A lender may reject the applicant if the report reveals a poor credit history. Therefore the home buyer should seek out and mend any problem areas in the credit report, before beginning the mortgage application process.
In the mortgage application process, the maximum amount of funding available to the borrower is determined by the lender. The loan amount will be computed using the value of the property and the personal financial state of the applicant.
The property's value will be estimated by a real estate appraiser. The lender typically allows the applicant to borrow up to 80% or 90% of the appraised value of the property. A down payment is then negotiated, along with an interest rate. The applicant should be equipped with proper documentation of their income. Proper tax forms and year-to-date pay stubs are most commonly used.
The buyer should also have the purchase contract agreement for the desired property. The time frame for an approval process may vary due to several factors. These factors include the state of the economy, the difficulty level of the mortgage itself and whether additional information is needed from the borrower.
Typically the mortgage application process lasts up to 30 days from the date of application. If the application is rejected, the lender will usually supply a reason for the rejection. Understanding fully why the application was denied can be useful when applying with a different lender.
Acquiring the information necessary to make the appropriate repairs to the problem areas, will greatly improve the likelihood of approval in the next mortgage application process.
Working with a mortgage broker may greatly reduce the stress related to this process, since mortgage brokers are experienced in the application process. Mortgage brokers can help the borrower in acquiring a clean credit history and the proper paperwork needed to improve the likelihood of acceptance.
by: Paul Mangion
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