In general terms, a mortgage is defined as a security document which allows the borrower to keep the title of the property as a security tool to experience the benefits of gaining a loan. As there has been a constant change in the trends of the mortgage industry, the demand for the mortgage outsourcing services has been increasing tremendously.
Among the major services outsourced, the top two on-demand services are mortgage data entry and mortgage loan processing. Over here, we are discussing the 5 different phases involved in the mortgage loan processing.
1. Mortgage pre-approval
Setting up a mortgage loan pre-approval helps to give you an easier and smoother process of buying a real estate property or house. In the past few years, a lot of significant transformations have occurred in the mortgage industry. In case of purchase transactions, most of the real estate agents primarily enquire about the availability of a loan. And thus, today one of the best measures to approach a real estate agent is with lender pre-approval loan. Usually, the pre-approvals do not consume much of the time. Once you apply for the pre-approval, you will be handed with a tri-merge credit report which gives a focus on the customer’s credit score and the credit history. With the assistance of a perfectly prepared credit report, a lender can easily track your payment history and it will also enable the seller to have a positive impression about the buyer.
While carrying out the process of mortgage pre-approval, one of the important things to perform is to gather the documents required for the mortgage pre-approval.
2. Mortgage loan application
A couple of the documents are supposed to get the loan file through underwriting. Most of the information can be obtained from the web whereas the other can be collected through the phone. A few of the information will also be mentioned in the documents submitted for the mortgage loan application. The below-mentioned list can help you to keep a track and your loan officer will help you on how to prioritize the list.
Employment details such as the name of the current employer, official address, working experience with the current employer, and overall salary.
Income – Presenting the profit and loss statement (if you are running your own business), pension, child support etc.
Assets – Mentioning the bank accounts, investments, and the gifts which are funded by the relatives.
With the above-mentioned, the real estate agents will get an overview of the type of home, expected sales price, size of the property.In case of applying for a VA loan, one must provide the proof their military service. These loans are the mortgages which are guaranteed by the US Department of Veterans Affairs.The above-mentioned documentation works merged together forms the ‘Loan Estimate’. Generally, the loan estimate includes the interest rate, monthly payments, and the closing costs.
3. Loan processing
The loan processors collect the documentation works about the property and the borrower, so as to review the information mentioned in the loan file. The underwriters assemble the information in an orderly manner and obtain the following:
- Order credit report
- Order property appraisal
- Order title search
- Order property inspection
- Verifying the employment and the bank deposits
The underwriter is considered to be the major decision-maker in the process of mortgage loan processing and mortgage claim processing service. They carefully analyze the documentation prepared by the loan processor. They cross-verify to see whether the borrower and the property counterpart the desires of the loan product. Underwriters also review the credit history of the borrower and also their ability to repay the loan. After the careful scrutiny, the underwriter may accept or reject the loan. At times, they approve the loan under certain conditions. During a specific point, the interest rate of your loan might get locked. Title insurance is ordered in the pre-closing phase so that you get the access to the keys of your new home. Once the conditions are satisfied, the preparation of the closing is scheduled.
Documents are printed and sent to the office of the attorney where the closing takes place. Closing Disclosure is one of the major document which gets highlighted during the closing. Loan estimate mentions the expected cost whereas the closing disclosure confirms these costs. It is mandatory to review the closing disclosure three days before the closing meeting. During the closing meeting, some documents hallmark the deal between you and the lender whereas some between you and the seller. You need to bring two official personal identification forms during the closing meeting. The major list of closing documents includes:
- Promissory note
- Deed of trust
- Certificate of occupancy
- Closing disclosure
When the entire process is completed and gets signed, your participation in the closing meeting stops right there.