Title:
An Overview of
the Mortgage Process
Word Count:
452
Summary:
House hunting can
be an exhilarating process as you try to pick that perfect property. Applying
for a mortgage isn’t nearly as much fun. Following is an overview of how the
mortgage industry works.
Keywords:
mortgage,
mortages, apply for mortage, home loans, secondary market, mortgage
application, lenders
Article Body:
House hunting can
be an exhilarating process as you try to pick that perfect property. Applying
for a mortgage isn’t nearly as much fun. Following is an overview of how the
mortgage industry works.
An Overview of the Mortgage Process
You have a nice chunk of money saved away for a down payment. You have started
shopping for a home or have found the perfect property. It is time to enter the world of financing,
better known as getting a mortgage. Before entering the labyrinth, it might
help to get an overview of how the mortgage process works.
A mortgage simply is a debt instrument that acts to secure a cash loan to you
on a home. In exchange for giving you the money, the lender puts a first lien
on the prospective home for loan amount. If you default, the lender can
foreclose and sell the home to recover the debt amount.
In mortgage industry terms, applying for a mortgage is known as originating a
loan. To originate the loan, you will first have to find a lender you are
comfortable with. You may have a close relationship with a bank that will
suffice. Many will find it advisable to use a mortgage broker to shop for the
loan that best meets their needs. Different lenders offer different loans and
terms.
As part of the origination process, you will fill out a lengthy loan
application. Depending on the nature of the loan, you probably will also be
required to submit documentation supporting your claims of income and so on.
There are no document or partial document loan applications, but most people
don’t qualify for them. Once your application is submitted, a lender inevitably
will ask for more information or documentation. Depending on how the review,
known as underwriting, goes, the lender may decline or accept your application.
Often, the lender will add a stipulation to the loan that cover issues it is
concerned about.
Once you are granted the loan, you will close on the residence you are after.
Most people are then very surprised by what happens. Inevitably, your mortgage
lender will sell the loan to another entity. To raise cash to issue more home
loans, lenders sell their current stock of mortgages on a secondary market.
Your lender may continue to handle the administration of the loan, but will
often just hand the entire thing off.
Your mortgage will be terminated at some point in time. Positive reasons can be
the sale of the home, refinancing or simply paying off the balance. Negative
reasons can include default or bankruptcy. Regardless, the above represents the
basic structure of the mortgage industry and how your loan moves through it.