There are five steps to the loan process and they can be very involved and sometimes confusing, however, each step is important to the overall process. Lenders are required to follow specific protocols in order to approve buyers and determine how much money they can borrow. This loan process is also applicable to getting prequalified and preapproved for a loan.
There are five steps to getting a loan approved, and we've outlined them here to help borrowers understand how loans are processed by lending banks like ourselves.
Step 1: Figuring out how much you can borrow
Every person who wants to borrow money from a bank will first need to find out how much the bank is willing to lend them. That is determined by a variety of factors, including a pre-qualification, debt-to-income ratios, down payment and more.
Step 2: Finding the right loan
There are a variety of financial solutions that will meet most buyer's goals. Whether your intention is to buy a home or refinance, there are usually two basic types of home loans, and each one offers a unique set of options to consider: Fixed Rate Mortgage or Adjustable Rate Mortgage.
Step 3: Apply for the loan
This is a simple step that requires home buyers to apply for their home loan through the lender of their choice. This step will also require a variety of documentation to be submitted in order to complete the application process. There may also be times where additional documentation is requested by the lender in order to process the loan request. The lender reviews all of the buyer’s information in order to determine the amount of money that the buyer is eligible to borrow based on their financial situation.
Step 4: Beginning the loan process
The loan process involves a unique set of steps that are necessary according to standards set by government agencies and loan approval guidelines that most banks adhere to. The home loan process also bases its approval on two factors that include; your ability and willingness to repay the loan and the value of the property. The following information is required in order to complete the loan process:
- Income and employment check
- Credit check
- Asset Evaluation
- Property Appraisal
- Other documentation based on the buyer’s unique situation
Step 5: Closing your loan
Once a buyer’s loan is approved a loan-closing appointment is set. This is when buyers sign their final loan documents. During the closing, buyers review their documents prior to signing them to ensure that their loan terms and the interest rate is what was agreed upon during the loan application and approval process. Most loan documents are signed and completed in front of a notary public. During the closing of a loan, fees associated with the mortgage and property transfer of ownership are expected to be paid. Buyers will be expected to also show proof of closing documents, like homeowner's insurance (and proof of payment) and other requested documentation in order to finalize the closing.
We know there are many places to find a home loan, yet not all home loans are equal. Since every homeowner has a unique set of financial needs, Premier Mortgage Resources provides a wide array of loan products and investment tools to help meet those needs. Most of all, we focus on providing the highest quality service and attention to detail that you should expect with your home loan provider.