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Pre-Qualification

Pre-qualification starts the loan process. Once a lender has gathered information about a borrower’s income and debts, a determination can be made as to how much the borrower can pay for a house. A borrower should get pre-qualified for the owner finance loan before submitting a purchase offer to be sure they qualify to purchase a home.

Mortgage companies look at two key factors when attempting to approve homebuyers for the type and amount of mortgage they want. To begin, the first factor is the borrower’s ability to repay the loan. The second factor is the borrower’s willingness to repay the loan.

The ability to repay the mortgage is confirmed by your current employment and total verifiable income. Mortgage companies often prefer for you to have been employed at the same place for a minimum of two years, or at the least, have been in the same line of work for a few years.

The borrower’s willingness to repay is determined by examining how the property will be utilized. For example, living in the house as your primary residence. Owner Financed homes require that the buyer must occupy the property for a minimum of 1 year. Willingness is also related to how you have fulfilled previous financial commitments, thus the emphasis on the Credit Report and/or your rental payment history.

There are no rules carved in stone in regard to mortgage loans. Each applicant is handled on a case-by-case basis, and must at least meet minimum the lender’s requirements.

Loan Application

The application is where the true beginning of the loan process starts. Our company representatives will provide assistance while the borrower completes the application and provides all Required Documentation. Additionally, a mortgage professional with the lender will supervise your loan process form the application through the purchase of the home.

The various fees and closing cost estimates will have been discussed whi and these costs will be verified by the Loan Estimate which the borrower should receive within a few days after the submission of the application to the lender.

The Loan Estimate

A Loan Estimate is a form that you receive after applying for a mortgage. The Loan Estimate provides important details about the loan you have requested including, estimated interest rate, monthly payment, and closing costs for the loan. There will also be information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. The Loan Estimate will indicate if the loan has special features that you need to be aware of, including penalties for paying off the loan early (a prepayment penalty) or increases to the mortgage loan balance even if payments are made on time (negative amortization). The form uses clear language and its purpose is to help you understand the terms of the mortgage loan you’ve applied for. To make it easier for you to compare mortgage loans, all lenders are required to use the same standard Loan Estimate form, so that you can choose the one that is right for you. When you receive a Loan Estimate it does not mean that your loan has been approved or denied. The Loan Estimate shows you what loan terms we can offer you if you decide to move forward.

Processing

Once the application has been submitted, the processing of the mortgage begins. The Processor orders the credit report. Once approval is given and disclousres are signed by the buyer, an appraisal is ordered. The Title company will also order a tax certificate to verify property taxes are current. Title commitment is provided by the Title company.

The information provided on the application, including bank deposits and payment histories, are verified. Any credit issues or reported negative marks , such as late payments, collections and/or judgments require a written explanation. The processor reviews the Appraisal and Title Report checking for property issues that may require further investigation. The entire mortgage package is then put together for submission to the lender.

Required Documents

Once you have completed the loan application, accepted the loan estimate and indicated your intent to proceed you will need to provide documents in order to obtain your loan approval. This is not a complete list of what will be needed but these comments are intended to give you an idea of what will be needed from you.
– 1 month of pay-stubs: OR, the past year’s tax return depending on your employment situation
– If you own rental property you will need to provide Rental Agreements and the past year’s tax return.
– Profit & Loss Statement if buyer is self-employed.
– The past three months’ bank, stock, and mutual fund account statements.
– You will also be asked to provide the most recent copies of any stock brokerage or IRA/401k accounts that you might have.