If you are one First time buyerYou might feel intimidated by the prospect of applying for a mortgage. You understand that there is a lot of paperwork to attend to and you may also fear that you will be denied a home loan, which could destroy your dreams of owning a home. However, the more you know about the process, the better equipped you will be when it comes time to apply for a home loan.
Put simply, the mortgage insurance process consists of having a mortgage insurer analyze your overall financial situation to assess how likely it is that you will be able to take out regular loans Mortgage payments with your lender. They study your income, credit rating, and debt obligations to better understand whether you might be exposed to a loan default or if you are a solid investment.
Why Do Lenders Need The Credit Insurance Process?
Mortgage lender – Credit unions, banks and private mortgage lenders – must meet the requirements developed by the Consumer Financial Protection Bureau (CFPB) to ensure fair and transparent treatment of borrowers. Also, in order to treat you fairly, lenders must go through a solid approval process to protect their interests before they can fund your loan. The process protects borrowers and lenders from bad credit practices.
What documents do you need for the mortgage insurer?
Each lender has a specific process, but in general you will need to provide the following seven documents for pre-approval:
- Last tax return: It’s okay if you don’t have an expression. With your signed authorization, your lender can request your tax return.
- Proof of income or W2: If you have a regular payroll job, your employer will issue a W2 form to document your compensation from this job for the previous year. You should have copies of your two most recent W2’s for this process. If you don’t get a W2 because you work cash or are self-employed, you will be asked to provide proof of cash or direct deposits.
- Bank statements from your bank accounts, investment accounts, life insurance and retirement accounts: Your lender will request statements of account for each account you have deposited money into, to get an idea of your overall financial condition.
- Gift letter: If you are going to buy your home with gift items from a friend or family member, you need one Gift letter explain the source of the funds. This is a simple letter that you can prepare yourself.
- Photo ID: To prove your identity, you will need to provide a copy of your driver’s license, passport, or other government-issued ID. A work visa will work too.
- Rental history: You may be asked to provide proof that you paid rent for the past year. This can be done in the form of duplicate checks, voided checks, or you can ask your landlord to provide a documented payment history.
- Credit report: Your lender will prepare a specific mortgage credit report along with other documents. This report is different from a consumer report, which you can request for free. You may need to explain any credit problems to your mortgage lender so they can determine if there are any errors on your report.
4 steps to expect in a typical mortgage insurance process
- Completing the application: This process can involve filling out a form online, meeting in person, over the phone, or using a lender’s app. As a rule, online application is the most efficient way of applying. Just make sure you submit all the required information.
- Processing your application: Your lender’s processing team will review your documents and order the home appraisal and any additional documentation required by the insurer. Lender processing ensures that your file is as complete as possible before sending it to the underwriter. Your lender can contact you with any questions to verify the information you provided. When all the documents are complete, your loan package will be filed next to the insurer.
- Mortgage Insurance: This process determines whether your loan application will be approved or denied. With a complete package, underwriting can be carried out quickly. Once you have final approval, your loan package will be sent to the lender’s closing department.
- Conclude: Ideally, your lender will submit your approved loan package to you Real estate attorney or title company asap so you can review all of your graduation documents before graduation. It is important to review all financial statements to make sure the numbers are correct prior to closing.
How long does it take to draw and final mortgage approval?
Typically, most lenders can complete the subscription process in 2 weeks, but this can take up to 30 days. Of course, this may depend on how active the real estate market is and how busy the lenders are during that time.
The mortgage insurance process may seem daunting or complicated at first, but it stays on track. A good lender will do their best to protect both the borrower and the bank and issue a loan that will be repaid in full. Now that you are familiar with the mortgage insurance process, you can provide your lender with all the necessary documentation to get your loan going.