A Detailed Explanation of Mortgage Application Process for New Homes

A Detailed Explanation of Mortgage Application Process for New Homes

If you are a first time buyer, it is important to have knowledge of the process involved in getting a mortgage approved.

The process begins with the initial contract with a lender and ends with a sealed deal. There are very similar laws and regulations which govern the way lenders operate their business. They also operate in similar markets with the same technology. It is the similarities rather than the differences which are important to consider when comparing lenders.

You can easily spot devious lenders by the different way they conduct their business.

The first step is interviewing lenders for the possibility of a loan. Once you have obtained suitable terms, ask for an assurance that you will have the closing documents at least 48 hours before the settlement date.

The second step involves getting information about the loan and a price quote reasonable enough for your financial status. The lender inquires from you via phone and emails about information concerning credit, income, assets and other properties.

If your preliminary information impresses the lender, they move to the third step. They inquire for your social security number so they can access your credit record. They also request for your income and asset documentation.

If the data checks out with the lender, they will call you to discuss loan options on offer. You have to choose carefully to obtain a loan option that is tailor made for your financial capability.

The lender will then go through your documents with a fine tooth comb then prepare loan documents for you. These documents should include a Good Faith statement and Truth in Lending disclosures. They contain all the terms of the loan being offered.

Market value for new homes shifts on a day to day basis. The price value set in the lenders documents expires after twenty four hours. A genuine lender offers you the opportunity to lock prices before receiving loan documents. They will explain how long a lock period is needed to be safe.

Due to regulation induced delay in obtaining property appraisals, the period has become longer in recent times. Afterwards, you will receive the disclosure package that requires your signatures. Some of these have to be returned to the lender. Meanwhile, the lender verifies your income and assets while appraising the house.

If the appraisal comes back 5% below expectations, it will increase the interest rate or mortgage insurance premium. This will require a new set of documents.

The final process is closing the deal. Two or three days before, you should review all the documents and compare them with earlier disclosures.

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