Getting a Mortgage?
Getting a mortgage can be a lengthy process. If a bank is going to lend you the money to buy a home, it has to make sure you can be counted on to repay the loan. It also has to ensure the home is worth what you want to pay for it. The entire mortgage process can take several weeks to accomplish.
Checking Your File
When you apply for a mortgage, you’re asking a bank to lend you hundreds of thousands of dollars, possibly for decades. To protect that investment, the bank needs to thoroughly examine your application, a process known as underwriting. One of the first steps is getting a copy of your credit report and reviewing it for red flags — signs that you’ve had problems with managing credit. Before you apply for a mortgage, it’s a good idea to review your credit report to see what the underwriters will see. Being prepared for any questions that might arise can help prevent delays in approval.
Verifying Your Data
During underwriting, the bank will verify your income, your assets and your other debts. To pay your mortgage each month, you’ll need a steady income, and the bank would like to see that you have financial assets you can draw on in case your income is interrupted. The verification process involves calling your current and possibly past employer to check on your employment status, ordering copies of your tax returns from the government, and reviewing account statements and other supporting documents you provide. This can be the most time-consuming step of the process. To avoid delays in the mortgage process, provide the most up-to-date versions of all requested documents when you apply.
Assessing the House
Even if you pass the bank’s creditworthiness tests and are “pre-approved” for a mortgage, you’re not going to receive any money until you have made an offer on the house you want and have had the offer accepted by the seller. At that point, the bank orders an appraisal of the house — an expert opinion of how much the home is worth, based on the characteristics of the property and recent sales of similar properties. The appraisal determines how much the bank is willing to lend. If you want to buy a house appraised at $300,000, for example, the bank isn’t going to lend you $500,000. Appraisals can take days or weeks to complete, depending on demand for appraisal services.
Odds and Ends
The home-buying process involves a number of factors that determine loan approval, such as problems with the home’s title or issues with inspections. The best way to keep the process moving along is to simply be available. Say your loan officer has a question she needs answered. If she can get you by cellphone or even text message for an immediate answer, she can keep working on your file; if you’re out of touch, she may set aside your file to work on another.
About the Author
Cam Merritt has been a professional writer and editor since 1992, specializing in articles about personal finance and law. He has contributed to USA Today and the Better Homes and Gardens family of magazines and websites. Merritt has a Bachelor of Arts in journalism from Drake University.