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How Your Mortgage Is Approved

By Colleen Colkitt

Pre-Approval

When you're just starting out on the mortgage loan process, the first step in the process is to speak with a loan officer. This salesperson will take your application once it's ready. You will discuss qualifications, and evaluate your credit, and determine an estimate of how much you can borrow.

Get Approved

To get the loan approved, the borrower must provide the loan representative with the required supporting documents. You need to fill out the application, which will be the Uniform Residential Loan Application. Information about your income, tax records, and bank statements will be on the form.

Submit the application to your loan officer and within the next 3 days you should receive a packet of "disclosures." This includes a good faith estimate and a truth-in-lending form. The information on your application must be in agreement with the lender's conditional offer, and then the application is submitted.

Now the loan officer will give your application to the operations department, which is usually in an office you won't ever get to see. The application goes under review for banking professionals: loan processors and underwriters.

During the processing, your information is scrutinized thoroughly. Processors look for mistakes on the application, they check your liabilities and credit history. Your income and even your employers are looked at as well. Even your down payment will be checked and verified.

The next step is for the underwriter to make the decision for approval. The underwriter must decide if the risk of loaning you money is worth it, factoring in interest rates. Here is where lending guidelines from Fannie Mae, Freddie Mac, and the Federal Housing Administration need to be met. Sometimes processors consult with this department, and then the final decision is made!

After Approval

Even though your loan is approved, your work isn't done just yet! Make sure to fulfill all the requirements on the underwriter's checklist of borrower conditions. The checklist will tell you what you need to do to make sure your loan will be approved for closing. Most times these borrower conditions will include getting alternative and supplementary documentation, explanation and correction of anomalies, and verifications and attestations. Make sure everything checks out, and you're all set for your mortgage loan!

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