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The mortgage application process: From starting to closing

Posted on: April 24, 2020 at 4:00 pm

Mortgage App

Planning to use a mortgage to buy your next home? These are the main stages you will encounter in the process:

  1. Pre-approval

    Before you begin searching for listings, apply for a mortgage pre-approval. Through this process, a lending agency reviews your personal, employment, and financial records to assess how much you are eligible to borrow. The lender will also inform you about the terms best suited for your loan, as well as the type of mortgage you can choose to avail.

    All of this information will appear in an official letter that you can use to strengthen your offers to home sellers.

    Try requesting pre-approvals from up to three lending agencies, so you can compare the best mortgage programs available in your area.

  2. House shopping

    With a loan pre-approval, you have a better idea of how much you can spend on a house. Now, you can start exploring the outstanding selection of homes for sale in Malibu, CA.

    Work with an experienced local real estate agent to select listings that best match your needs, interests, and price range. Their insights are invaluable during open houses and viewings.

    Your agent will also help you craft strong offer packages. When you succeed with a pitch, they will negotiate on your behalf to arrive at the most favorable final price for the property.

  3. Loan application

    After settling into a purchase agreement with the seller, you can apply for your mortgage. This process is straightforward as most lenders use the industry-standard Uniform Residential Loan Application form (or Form 1003).

    Be sure to have your personal and financial records ready. Chances are you already have most of these required documents on hand if you were able to secure a mortgage pre-approval earlier.

    You must also indicate the property’s street address, sale price, property type and size, homeowner association dues, and estimated closing date. Ask your agent to help you secure data on the property tax rates that apply to the house.

    After this, you will receive a Loan Estimate, which describes the estimated costs and expected terms that will be applicable to your mortgage.

  4. Loan processing

    If you accept the details presented in your loan estimate, your application will officially be processed. At this stage, the lender will proceed with the assessment of your credit report, bank statements, employment records, and other credentials.

    The lender will also order a proper inspection, appraisal, and title search for the property, unless the buyer and seller have agreed to waive any or all of these contingencies.

  5. Underwriting

    The underwriter makes the final decision on your loan application, based on whether your eligibility requirements match those of the mortgage. The underwriter will thoroughly cross-check your documents to assess the level of risk that will be associated with your loan.

    While the underwriter can directly reject loan applications, a conditional approval is another possibility. These are usually minor requests, such as a letter explaining certain bank transactions, and may easily be resolved to keep the application moving forward.

  6. Closing

    If your application is cleared to close, the lender will send you a Closing Disclosure. This document is similar to the earlier Loan Estimate, except the relevant details here are considered final. You have three days to review this form for any issues or discrepancies.

    If you find no issues with the final loan terms, you can officially close your deal with the seller.

Looking for more advice on buying luxury homes for sale in Malibu, CA? Let Marco de Longeville Luxury Realty be your reliable guide. Call 213.675.0197 or email marco(dotted)delongeville(at)vistasir(dotted)com today for more information.