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What is Mortgage Loan Processing? Four Stages in the Loan Cycle

Mortgage loan processing is the process which is involves the different steps which your loan application undergoes before it finally gets approved. There are some steps which has to be followed by the borrower when they apply for mortgage and it takes around 6 to 10 weeks to complete the process. These steps are almost similar with every lender but generally there are some difference  in figures which depends on the standard of lenders and the experience and expertise of the lenders.

Here are the four steps which is common with every lender:

1)      Applying for mortgage: Once you get a lender who is ready to finance you, then you have to first write or complete a loan application form and submit it with the lender. Generally this is done electronically using internet as maximum lenders now deal online through their websites. Once the application form is received by the loan processor then you will receive a call of conformation and the details will be provided to you regarding the documents which are required for the processing of loan. These documents are namely bank statements, W2 form, pay stub, income tax return if in case you are self employed and other documents which confirm your identity and the financial status .

2)      Verification of information on documents: Once the loan processing department receives all the documents required then all these documents are transferred to the verification department where the officials will call certain people like your landlord, employers, banks, and other people who are mentioned in your documents for the verification of the facts. This is done to see whether the information provided by you are genuine or not. Once all these documents are verified then it means you have passed the pre- approval step which further states that all the requirements are fulfilled by the borrower. It is then that your file will be forwarded to the lender by the loan processor. Lenders duty is to give you title report and appraisal for which the lender takes about 14 days time.

3)      Underwriting your loans: This is the stage where loan amount is decided and the other terms of the loans are confirmed. In this stage, the underwriter will validate the documents submitted by you. They can even ask for your credit report to check your credit worthiness. In this stage, title search report and appraisals get confirmed. These underwriters have the  power to either accept the application for personal loans for people with bad credit or to deny it. In case, the underwriter accepts the loan application the file will again get back to loan processor with the pre- closing statement but if in case the file is returned with denial for loan then the loan processor would look for anything that they can do to help the person.

4)      Closing stage: If you loan application is accepted and verified by both the loan processor and underwriter then you’ll get qualified for the loan amount and you will get to the closing stage. In this closing stage all the terms and condition of loans in mentioned by the underwriter. These terms and condition consist of the points like the amount of loan sanctioned, the interest rate charged on the loan amount, the time period of loans, obligations which has to be faced by borrower if in case one fails to repay the loan amount, the penalties which will be charged to the borrower if in case they make late payments for their monthly installments.

Mortgage loan processing is almost same with every lender but there are different in the interest rates which are charged by lenders and the cost which is incurred in the processing of loan also differs. So a borrower should compare these two things of every lender to get the best mortgage loan.

Other than this, one should first check on their financial status to see if they are really capable to take the loan amount they require and how conveniently they are placed to repay the loans within the time limits set for the same. A smooth repayment regime can see great upliftment of your credit score and it can be a great way to maintain a great financial status.


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