By Gustan Cho
Once you decide to purchase a home, you need to select a mortgage lender. Most likely you will initially speak with several mortgage lenders and out of those you speak with, some will tell you that you do not qualify for a mortgage loan due to their lender overlays while a few will pre-approve you for a mortgage loan. You will then choose one mortgage lender who pre-approved you and will sign a completed mortgage application as well as the required disclosures.
Most mortgage application packages and disclosures are over 50 pages. It is probably the largest official application package you will ever encounter and need to sign. Many first time home buyers or those who never had to apply for a mortgage loan often wonder whether signing these mortgage documents will obigate them to commit to a 30 year fixed rate mortgage loan. Prior to signing the mortgage documents and disclosures, mortgage loan borrowers will need to submit their whole financial package to their mortgage loan officer such as two years tax returns, two years W-2s, 60 days bank statements, most recent pay check stubs, copy of drivers license, copy of social security card, and other necessary documents pertaining to their mortgage loan application. It can be pretty scary as you sign and date the mortgage application package and all of the disclosures. It feels like you are signing your life away. The good news is that there are strict federal and mortgage lending regulations that protect the residential mortgage loan borrowers and you can always cancel a mortgage loan application until the day you close on your mortgage loan.
The Mortgage Application Process
There is a lot of work for the mortgage lender to process and underwrite each individual mortgage application and run it through the mortgage application process until the mortgage loan application is complete and a clear to close is issued. Federal and state regulations dictate that a mortgage lender cannot force a mortgage loan applicant to close on the mortgage loan and it is the consumer’s right to be able to cancel the mortgage application at any time during the mortgage approval process. You can actually cancel your mortgage application until the date of the closing and walk away without being obligated to pay any fees and take your mortgage application to a different mortgage lender. Who pays the mortgage loan originator, mortgage loan processor, mortgage loan underwriter, and mortgage company support staff? Not you. Mortgage lenders are different than attorneys where they cannot charge you for the work already performed. Mortgage lenders and their staff cannot charge you for any fees except the appraisal fee unless the mortgage loan closes and funds. If during the mortgage loan application process, you decide that you are not happy with the performance of the mortgage company who is underwriting your mortgage loan, you can walk away from the mortgage approval process and not be liable for any fees.
Home Purchase And Home Refinance Mortgage Loans
On a home purchase mortgage loan transaction, the mortgage company funds the mortgage loan on the date of the closing. Once you sign the mortgage closing documents and the HUD at the title company , your mortgage lender will send the wire to the title company and the funds gets dispersed and the transaction is done.
On a refinance mortgage loan transaction, the mortgage loan gets closed but funding is delayed for three business days due to the right of recission. The right of recission is the right for the mortgage loan borrower to cancel a transaction and the refinance mortgage loan borrower has 3 business days to cancel a refinance mortgage loan after signing the closing documents and the HUD. Once the 3 days has passed, the mortgage loan is funded.
Related> Applying for and getting your mortgage
Related> Mortgage application process