Understand Important Steps Involved in Mortgage Loan Process

Understand the Step-by-Step Process of Mortgage Loan
Understand the Step-by-Step Process of Mortgage Loan
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Consulting with experts and a trustworthy real estate agent is a wise step before actually diving into a loan application process. An amateur borrower often skips this step, leading to several problems associated with loan approval, budgeting or mortgage underwriting. In this article, readers will learn about a simple mortgage loan process involving the least number of steps.

What is the mortgage process?

The term ‘mortgage’ goes hand in hand with secured loans like loans against property, and it simply refers to the borrower’s pledge of value against the sanctioned loan amount. 

When an individual applies for a home loan, they must place their existing property as collateral. Depending on its market value, a financial institution approves the loan amount. 

Calculating the monthly mortgage payment is crucial before purchasing a mortgage loan, as it helps maintain the overall budget. In this guide, the steps involved in the mortgage loan process have been briefly discussed.

What are the steps involved in mortgage loan processing?

Here are some crucial steps associated with the entire loan process:

Step 1: Mortgage pre-approval: A pre-approval letter is a prerequisite for borrowers intending to set aside a budget for loan payments. It assures the lender of the individual’s repayment capacity by disclosing the income and spending estimations. 

Several financial institutions offer customised plans to aid their emergency financial needs. These tailored credit instruments are available on several products, including home loans and loan against property, and significantly speed up a borrower’s loan approval process. To check their pre-approved offers, borrowers only need to enter a few basic details. 

Step 2: Home hunting and comparing various offers: After shortlisting from a list of properties, the potential buyer places a bid to the seller, which he may accept or decline. The seller and the lender must agree on the particulars of the written offer to move to the next stage of the mortgage loan process. 

Step 3: Loan application: This step of the mortgage loan process demands the borrower to answer a few questions regarding their employment, existing debts, assets and property value. While applying, the borrower can either select an adjustable-rate mortgage loan or a fixed-rate mortgage loan after estimating their capabilities to pay back the respective interest rates. 

Step 4: Loan processing: At this stage, the lender verifies the applicant’s submitted documents to prepare the official papers for mortgage underwriting. Whether the loan seeker has approached a financing institution for refinancing or buying a property for the first time, regardless of the lending purpose, loan processing is performed intricately before finalising approval. Gathering proof of existing assets and verifying the borrower’s employment status is a sure-shot way to ensure that the borrower does not default on loan against property. 

Step 5: Mortgage underwriting: A lender overseas whether an underwriter can accept the loan request of a particular borrower based on their current financial status. While making this decision, the designated officers assess potential risks involved, like LTV that could disrupt the payment in the middle of the tenor.  

Step 6: Mortgage closing: The final stage of the loan payment cycle is where the lender issues a closing disclosure document recording all related transactions. It is an elaborate process and may take up to some weeks as each involved party must duly sign the mandatory fields. 

How to apply for a secured loan?

Please follow the steps to learn how a loan against property is processed:

Step 1: Visit the official website of a lender and look for the mortgage loan type, for example, loan against property, commercial purchase and more.

Step 2: Access the application form to provide personal and property-related information

Step 3: Provide the income details to generate a list of loan against property offers

Step 4: Click on the ‘Submit’ button to complete the application process

A dedicated customer relationship manager is assigned to scrutinise all the provided details and finalise the disbursal of the loan amount. 

Once the payment has been settled, the borrower gets to sign the final mortgage documents. Reaching this stage without prior preparation is challenging indeed, as the borrower needs to know about loan against property in detail to avoid traps of high debt-to-income ratio. 

ritika sharma