Mortgage Process And Mortgage Conditions
Getting a residential mortgage loan is a process. The first stage of the process is completing a mortgage application, also known as the 1003. It is a 4 page mortgage application where you need to complete personal questions such as your name, address, social security number, date of birth, phone numbers, places of employments, previous employers, previous addresses, subject property you want to finance, assets, liabilities, income information, credit information, and answer questions about your credit history, financial history, and financial status. All the information on the 1003 will need to verified via tax returns, 2 month bank statements, W-2’s, pay check stubs, bankruptcy papers if it applies to you, divorce decree if it applies to you, tax lien releases if it applies to you, and other personal financial and credit documents. A credit check will be pulled from the three giant credit reporting agencies; Experian, Equifax, and Transunion. The middle credit score will be used in evaluating your mortgage loan application.
Mortgage Loan Processing And Mortgage Loan Underwriting
Once you have submitted a signed mortgage loan application along with the necessary requested documents, it will be assigned to a mortgage loan processor. A processor processes your mortgage loan application and cross checks the items you have stated on your mortgage application to the items you have submitted. The processor makes sure that the all income, assets, and liabilities are supported by the documents you have submitted. They make sure you have had no overdrafts, does a verification of employment, and makes sure that all supporting documents are attached to your mortgage file. A processors job is to get your mortgage file as complete as possible to avoid as much mortgage conditions as possible by the underwriter. An incompetent processor will delay a mortgage application because the mortgage underwriter will kick back the mortgage file with tons of mortgage conditions. A good processor will make the underwriter’s job much easier and the underwriter will probably issue less mortgage conditions.
Once the processor submits your mortgage loan application to the underwriter, it is the underwriter’s job to approve or deny your mortgage loan. The mortgage underwriter will review your mortgage application, credit report, documents you submitted, appraisal, and other financial data and credit information to determine your credit risk. Credit risk is your ability to pay the new mortgage loan. The mortgage loan underwriter needs to feel confident that you are able to pay your mortgage loan without struggling to pay every month. The mortgage underwriter will evaluate every aspect of your personal and financial profile. Once the underwriter feels somewhat confident, the mortgage underwriter will issue mortgage conditions to proceed to the next level. Some examples of mortgage conditions are the following:
1. Request bankruptcy papers and/or letter of explanation why you filed bankruptcy.
2. If you hopped jobs, letters of explanations why you had job gaps or why hopped around so much.
3. Verification of employment.
4. Letters of explanations on credit inquiries.
5. Large bank deposits or withdrawals; will need letters of explanations and proof to explain large deposits and withdrawals.
6. Copies of cancelled checks for rental verification.
7. Insurance information.
8. Updated bank statements, pay check stubs, proof of funds for down payment.
Mortgage conditions must be met before the issuance of a conditional approval.