Methods to Underwrite a Mortgage Like a Financial institution
You may know the term, but what does it really mean to take out a mortgage?
Mortgage underwriting is the process that takes place behind the scenes after your application is submitted. Lenders use this process to take a closer look at your financial background and creditworthiness in order to assess your eligibility for a loan.
Below are the steps involved in getting a mortgage.
1: Secure your prequalification
Before buying a home, consult with multiple lenders to learn how much you can borrow. It will help you determine the price that you can afford and give you a good idea of the prices. Lenders often use basic credit and income data to provide prequalification details in as little as a day or less. However, there are also cases where prequalification can take 2 to 3 days.
2: Get a home appraisal
Valuation of your home is an essential aspect of the mortgage loan process and is often a contingency in the sales contract. A physical inspection of a home typically takes 3 hours or less, although it can take up to 2 days to a week before your lender sends you the appraisal.
3: Review of wealth and income
Your assets and income are also verified during the mortgage loan and property appraisal. The process can take three weeks or even longer, depending on how complex your situation is or how you are answering the inquiries.
For example, if you are self-employed and need to undergo an income test, this step can be completed in 3 to 4 weeks.
4: Apply and wait for the decision
You also need to officially apply for your mortgage loan and await the decision. It may take a day or two to get it all together and apply as these applications are a bit complex. The decision can take some time, up to 60 days depending on other factors.
5: Clarify all eventualities
If the sales contract ever includes contingencies like a home inspection or loan approval, you need to sort all of these out before closing. Depending on the schedule, it may take a week or two or even longer for all contingencies to be resolved.
6: Close the house
As long as everything is in its right place, you can expect the home to be closed within two months of the date of your sales contract. The average time to complete a home purchase can be around 45 days. The actual closure only takes several hours if all the necessary papers are in order and it is possible to check the escrow account.
The process of drawing a mortgage like a bank isn’t really as complicated as it sounds. All you have to do is follow the steps above so that you can get your mortgage off in no time and enjoy your new home right away.