Finance is confusing. And mortgage lending is a full-time job. This means that moving into your first home can be more than a little intimidating. That’s why you should invest in understanding the terminology and mechanics of mortgage lending before you start shopping for houses with your family or friends. Here is the lending process:
Qualification
The first step in the mortgage lending process is for you and your real estate agent/broker to start shopping for a house. Now is the time to apply for a pre-approval letter: a formal document that shows the lender that you are qualified to receive a loan. You will send this letter to the potential sellers of any house you want to buy. To get the lowdown, check out https://www.webuyhouses-7.com/massachusetts/we-buy-homes-boston-ma/.
Offering
If the sellers accept your offer, you send it to the seller’s bank or mortgage company. Your offer will be accepted, rejected or counter-offered. If it is accepted by the seller, the bank will send you a commitment: a formal document that shows how much they will provide for your house. This document should include all of the details of this agreement and include your mortgage broker’s name at the top.
Underwriting
Once you have accepted your offer, and before issuing your loan to the seller, the lender will underwrite your loan for any past or present delinquencies. This is called the credit review. This review may include a full investigation of all of your financial history including bank statements, tax returns, credit reports and pay stubs. It will take up to six weeks to complete this review. During this time, you should not make any payments on your other debts (such as a car note or credit cards).
Closing
Once the lender approves your loan, you will close on your house. You will receive a closing statement at this time. This is a legal document that shows how much you paid for your house, as well as all of the fees and other costs associated with your mortgage. You should review this document carefully before signing and returning it to the lender. For more details, visit https://www.mobile-home-buyers.com/massachusetts/sell-my-mobile-home-boston-ma/.
Funding and Disbursing
This is an important step in the mortgage process because it shows when you receive money from your lender. The money can be in a lump sum, or it can be disbursed in several installments. Before the lender funds the loan, they will do an appraisal at your house. This is to make sure that you are paying the agreed-upon price for your house. If you pay too much, some of your loan may have to be refunded.