Six essential steps to acquire a mortgage loan

In general, the process of getting a mortgage loan entails accepting an application, making an offer on property, applying for a loan, having that loan processed, having the loan underwritten, and then releasing the loan funds, which is known as closing. After this, we’ll discuss the rest of it. 

The Mortgage Loan Process is unique for each lender. There must be no omissions for the procedure to continue without mistake. In addition, it’s a crucial step for customers. 

The process for a first-time buyer is riddled with obscure and difficult-to-understand phrases and processes. Even the most seasoned purchasers might get a little lost in the swirl. For most applicants, the Mortgage Application Process may be a stressful moment, which puts additional pressure on them to ensure that the information they provide is accurate. Not being transparent or full in terms of agreement and mortgage frequently results in a deal falling through from a broker’s standpoint. 

1) Pre-qualification process: 

The Loan origination process begins here. At this point, the borrower will be given a list of materials they must provide to the lender in order to get a loan.

For example: 

Voter ID, AADHAR, PAN Card, etc. are all acceptable forms of identification. 

Bank statements and previous loan statements, as well as proof of current employment and salary. 

A pre-approval is issued to the borrower when this information is provided to the lending firm, allowing them to proceed with the loan application procedure. 

2) The Loan Request Form: 

It’s the second stage of the loan origination procedure. The borrower completes the loan application at this phase. Although lenders used to accept paper applications, they now prefer electronic ones, which eliminates the need for any paperwork at all during this step. The application process may now be completed online via a website or mobile app, and the information gathered can be customized to specific loan products. 

3) Application process. 

The credit department receives the application at this point, and the first step is to verify its authenticity, genuineness, and completeness. An incomplete application will be sent back to the borrower or credit analyst, who will then contact the borrower to get the information they need. 

Borrowers’ creditworthiness is determined using LOAN ORIGINATION SYSTEM (LOS). In order to complete a loan, a lender will need a solid LOS. When files are flagged as missing needed fields, the borrower is notified and the sales/credit department is notified to rework them. There may be exception processing involved in this stage depending on the organization and product.

4) The Process of Underwriting: 

The underwriting process begins as soon as an application is finished. A multitude of factors are now taken into consideration by Lender, including the applicant’s credit score, risk score, and many lenders establish their own unique criteria for scoring. A rule engine and API linkages with credit-scoring engines (CIBIL, EXPERIAN, etc.) in LOS have made this procedure completely automated. Loading underwriting criteria particular to goods into a rule engine is possible. 

5) Creditors’ Choices 

An application might be approved, refused, or sent back to the originator for more information based on the findings of the underwriting process. Specific characteristics, such as the loan amount or interest rate, can be changed automatically if certain criteria do not fit the rule engine. 

6) Quality Control 

The quality check step of the loan origination process is crucial to lenders since lending is heavily regulated. Afterwards, the application is given to the quality control team, which analyses crucial variables against both internal and external standards and regulations. Final review of the proposal before it is submitted for financing. 

7) Funding of the Loan 

Most loans are funded within a few days after signing the loan documentation. For legal and regulatory reasons, second mortgage loans, business loans, loans against property, and lines of credit may take longer to process. LOS may keep track of financing and make certain that the appropriate paperwork is signed off prior to or at the same time as funding is received. 

Finally, here are all of the separate stages of the mortgage loan procedure! You should now have a better idea of what to expect at each stage and how to prepare for them. Check with the post office and other important organizations like banks and government agencies to make sure you have changed your address before moving to a new location.