When you apply for a mortgage the lender has to "vet" you thoroughly. The lender uses a number of people, including an underwriter and mortgage processor, to complete the qualification process. Before you call a potential mortgage lender, understand the qualification process that a lender uses to determine if you're eligible for a loan.
The first step of the mortgage qualification process is for the lender to determine if the prospective borrower has the credit score and income to get a mortgage loan. The lender runs a credit check to find out the FICO score of the prospective borrower and asks preliminary questions about his financial status and employment. At this step the lender also determines how much the person is eligible to borrow. In many cases, a buyer needs a pre-qualification from a lender to get a real estate agent and start making offers for homes.
The next step is the application process. Once the borrower has settled on a home he fills out the Uniform Residential Loan Application (Form 1003) with the lender to proceed with the loan. This long form asks detailed information about the borrower's finances, household expenses, other debts, assets, employment and the home he wants to buy or refinance. The application also requests information about the intended transaction so that the lender can process the home loan.
The document collection and review process is one of the most crucial and time-consuming steps of the mortgage qualification process. During this step the lender requests documentation from the borrower to verify income, assets and employment. The documents required include recent pay stubs, bank statements, W-2s and tax forms. To properly qualify you for the loan, the lender must collect valid documents to prove the information you've provided on your application. During this step the loan processor also orders an appraisal -- an evaluation of the home's value -- and title search -- a check of the property deed for liens or other issues -- for the house you want to buy. The lender might also pull a second credit report and score to verify that there haven't been any major changes to your financial accounts since the day you applied.
Underwriting and Approval
The last step of the mortgage qualification process is sending the application, documentation, credit check, appraisal and title search reports to an underwriter for review. The underwriter is the person at a lending institution who evaluates a loan's risk and the borrower's capacity to meet the obligation -- the loan cannot proceed until the underwriter gives the go-ahead. Once the underwriter signs off on the loan, it is approved, and the borrower goes to closing to sign the final paperwork.
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