• Why Choose Us?
• Real Estate Listings
• Area Information
• Buying a House

• Selling a House
• Buyers' Request Form
• Sellers' Request Form
• Toolbox

Mortgage Loan Approval

You have found the perfect house for you and your family. Now you must secure a mortgage loan. To the first-time homebuyer, it may seem to be a complicated process but it is really fairly easy and straightforward. If you have done your homework, you will have already been prequalified and preapproved to jump-start the mortgage application process. If not, review Prequalification and Preapproval to see what documentation you will need to complete the mortgage application process.

Submit the Formal Mortgage Application

You will first submit a residential mortgage loan application to the lender of your choice. You can do this by meeting in person, by mail, by fax, or online. There are an increasing number of benefits to using an online lender. The largest benefit is lower rates that will save you thousands of dollars on your mortgage loan.

With the application submission, you may also be asked to provide the fees necessary to cover the cost of ordering your credit report (if you have not already provided it) and an appraisal. The appraisal determines the value of the property you want to purchase. You choose an independent appraiser from the lender's approved vendor list. The appraiser views the property and provides you and the lender with his report. The majority of loan products now have a standard checklist of requirements and documentation necessary for qualification. The mortgage lender's staff will work with you to complete this checklist for the next phase, underwriting.

Loan Costs

Within three days of a mortgage loan application, the lender is required by the Real Estate Settlement and Procedures Act (RESPA) to provide you with a Good Faith Estimate (GFE). RESPA was enacted in 1974 by the federal legislature to prohibit kickbacks or illegal fees in the mortgage industry. The GFE is discloses all costs and fees related to the mortgage loan process to the borrower. The costs and fees can include:

• Appraisal
• Credit Report
• Lender's Title Policy
• Pest Inspection
• Escrow (if applicable)
• Recording Fees
• Taxes

While the lender is required to provide you with the GFE, it is not required to guarantee the GFE. If your lender will not guarantee the GFE, you may want to look at another lender.

Underwriting

The industry standard for underwriting is now an automated process. Your application is submitted to a software application, either Freddie Mac's Loan Prospector or Fannie Mae's Desktop Underwriter. The software programs review your application to make sure that the guidelines are met for the lender and the loan program. It reviews the three 'C's: your credit; your capacity, which is your ability to repay the loan based on your debt to income ratio; and collateral, which is the value of the property. Automation of the underwriting process has resulted in quicker loan approval with less paperwork.

Denial of a Mortgage Loan Application

If your mortgage loan application is denied in the underwriting process, ask your lender the specific reason for the denial and what can be done to resolve those issues.

Mortgage Application Time Frame

The standard time to complete the mortgage application process is generally two to three weeks. If the type of loan requires less documentation, the time can be shortened by a few days. As a rule of thumb, the online process is now the fastest route to the mortgage loan approval.

---