Mortgage process explained.

What happens after you apply for a mortgage may give you some insight into how and where you may find your first or next mortgage. Most mortgage seekers will find their best mortgage through a mortgage broker, rather than going to a direct lender like a local bank. There are many reasons why a broker will be the best source. Given this, what will be addressed here, is the mortgage process explained when a borrower is being assisted by a broker. The reasons why a broker is the better way to go for most borrowers will be detailed later in this article.

The mortgage process actually starts with a preapproval effort. Regardless of where you go for a mortgage, you'll always be dealing with a representative who is either a Loan Officer or a Loan Consultant. It's this person's job to determine if you can qualify for a mortgage, and to some degree, what type of mortgage will work best for you... if you don't already know what you're looking for, or what you can afford. The loan consultant is not a salesperson, nor do they really have any direct authority in how, or if, a mortgage is approved. They start and guide the borrower through the process, and are the borrower's advocate... working on the borrower's behalf, and not the lender's.

In getting the process started, the loan consultant will ask you questions about your credit, your income and your plans for the property you're either purchasing or refinancing. Your answers to these questions will help develop a plan or direction for the loan consultant. If your chances for obtaining a mortgage are very slim or nonexistent, your loan consultant will explain why, and how you may correct or improve your borrowing profile.

If you're a good candidate for a mortgage, the loan consultant will most likely suggest moving forward to obtain a formal preapproval for you. Most borrower's questions about what kind of mortgage they can qualify for, its pricing and terms, and what will be required of them to obtain a final approval will be determined in the preapproval phase.

A real preapproval through an actual lender, which can be achieved in 24-48 hours, requires the loan consultant to pull a tri-merged credit report from Experian, Equifax and Transunion... the three major credit bureaus. Since all credit bureaus assign a credit, or what many people refer to as a FICO score, what the loan consultant needs to see is what the borrower's middle or midscore FICO is. For most borrowers, the 3 FICO scores which are assigned to their reports are 3 different numbers, and it is the mortgage industry's standard to use not the highest or the lowest score, but the one in the middle as the borrower's qualifying score.

Additionally, there are two paper forms which are the standard, and are universally used by all brokers and lenders in the mortgage field. One is simply the Uniform Residential Loan Application which is usually called by its nickname the "1003" (Ten-O-Three), and the shorter version of this form which provides a "snapshot" of the mortgage and the borrower called the "1008" (Ten-O-Eight). The loan consultant will complete both of these forms for the borrower, and along with a copy of the borrower's tri-merged credit report, will submit these three items to the lender or lenders who would be most likely to approve and fund the borrower's mortgage. The lenders will review this submission, and providing the borrower meets their lending guidelines, will offer pricing (interest rates and terms) and conditions to be met, relative to lending the borrower the funds required to either purchase or refinance the subject property. This submission process between broker and lender is how all brokers and lenders work together to fund mortgages. It is the accepted standard in the industry for how this part of the process works.

Borrowers often ask, "how long is a preapproval good for?". This can very slighty from lender to lender, but usually a preapproval is valid for 30 days and no longer. The reason for this timeframe is that many factors in the borrower's profile can change. Credit scores can go up or down. A borrower's employment situation can be altered. And, issues relative to the terms of the loan can change due to fluctuating market conditions.

Now, for many people a question arises at this point... will having several brokers or lenders pull and review their credit affect their credit scores? The answer is "no" as long as it's done within a 30-day period. As a credit consumer, you can have unlimited credit pulls as long as they're all credit pulls and reviews related to obtaining a mortgage loan. This is a relatively new law which went into effect in January, 2004.

After a preapproval has been obtained, a borrower who's going to purchase a home can begin the house hunt; knowing what price is affordable, what the monthly payments will be, and will have the confidence in purchasing as a preapproved buyer. Once a suitable or desirable property is located, the borrower then needs to secure a valid purchase contract on the property. If the borrower is buying without a realtor's assistance, it will be important that an accepted, legal form be used to demonstrate the fully-executed sales contract is valid in the state where the property is located.

After the borrower has secured the purchase agreement or sales contract, it's important for the borrower to provide a copy of the contract to the loan consultant. The next step will be getting the property appraised. While the loan consultant must make the arrangements for an appraisal, it is customary in the typical real estate transaction that the borrower pay for the appraisal. Full field appraisals in most parts of the country cost $300-$350, and this must be paid to the appraiser at the time of appraisal, or shortly in advance of it.

Obtaining a satisfactory appraisal is an important step in getting a final approval for the mortgage. The property being purchased must appraise for at least the purchase price. If it does not, the borrower will have the option of cancelling the sale, renegotiating the purchase price, or if the borrower wishes to proceed with the purchase at the agreed price, will have to come up with the difference in the purchase price and the appraised value. Lenders will not provide a mortgage for a property for more money than what it appraises for... so, if a borrower is approved for a zero down mortgage at $100,000, as an example, but the property appraises for only $97,000, the lender will provide financing of $97,000. And, if the borrower still wishes to purchase the property, the $3,000 difference will have to be paid by the borrower. So, in summary, getting an adequate appraisal is an important step for a smooth transaction.

Now, in the background while the borrower has been looking for a home, and while the appraisal is being performed, the lender, with the assistance of the loan consultant and the loan processor, is undertaking what is sometimes called, "due diligence". Things like the borrower's employment, rent or mortgage history, sources of assets, and so on, are being verified by the lender. Some lenders will obtain these verifications verbally, some will have regular written forms which are used for verfication that require signatures. But basically, much of the information which the borrower had provided to the loan consultant during application is now being verified. For instance, if a borrower at the time of application states that employment has been with the same company for the past two years, but an employment verification reveals only 11 months can be proven, then the borrower may have a problem. So, it's important to understand what a borrower claims will eventually be verified.

The process is almost at its final stage. Usually, the appraisal is the last step before the borrower's mortgage file can be completed by the loan consultant and processor, and then submitted to the lender's final underwriting review for approval. The lender's underwriter or underwriting team will usually complete this process in 24-48 hours. They will review the loan to see if all of the conditions have been satisfied. After which, assuming final approval is granted, the mortgage will move from underwriting to the lender's scheduling department for closing and funding.

Generally, the "closing docs" which are all the many papers a borrower signs at closing, are generated within 24 hours of the loan being scheduled for closing. These papers are usually e-mailed to the title company or escrow agency which is handling the closing. The borrower is then contacted by a title or escrow officer for a signing appointment. At this point, the process draws to a close, and the borrower has now officially purchased or refinanced a home.

You may wonder, if preapproval and final approval may each be completed in as little as 48 hours, why then make it require anywhere from 10 to 30 days to close and fund a mortgage loan? Well, it's all the things which happen in between preapproval amd final approval which can take time. Usually, securing an appraisal is a time-consuming effort, depending on the real estate market, obtaining an appraisal may take a week or more.

Verifications of employment, bank funds, rent history and so on... because their dependent on the cooperation of outside third parties... can also be time-consuming.

Usually, it's everyone's desire, and in everyone's best interest, to move the mortgage process along as quickly as possible. At Mortgage Match, mortgages have been closed and funded within 10 days, and our Senior Loan Consultants are experts in knowing what it takes in getting a loan closed in the best interests of a borrower.

Mortgage Match is one of the internet's premiere national brokers, doing mortgages in all 50 states, who excels in securing borrowers the best mortgages on the best terms possible. It has direct lending relationships with hundreds of national, regional and specialty niche lenders all around the country. Whether a borrower is a first-time buyer, or a home owner seeking to refinance on the best terms available, Mortgage Match is positioned to shop, find and secure a mortgage for a borrower as fast, easy and hassle free as the process needs to be. With Mortgage Match, wide product diversity and selection, along with richly experienced mortgage professionals can be the difference between borrowers getting the loans they need, and not getting the loans they need. Greatly enhance your prospects of getting the mortgage you want by clicking here.