Advice for Mortgage Applicants
Neuroscientists have found that home buying is one of the most stressful experiences for a human being, causing significant amounts of stress on the brain. Like any event that causes anxiety, waiting for a mortgage approval can be extremely nerve racking. Once you go through the application process and turn it in, there is really nothing left to do but wait. At this point it is out of your control until you hear from the mortgage company.
If it helps lift some of your worries, there are certain things that you can be sure are going on. The mortgage company will be making credit checks and verifications of employment, as you probably expect. There will also be some background or �underwriting� procedures going on to confirm the validity and trustworthiness of the information on your application.
Once the lender has decided to go ahead and approve you, they decide what loan they should offer you. This depends on the risk of lending to you. If they are almost completely certain you will be a good mortgage borrower and will pay the loan in full and on time, they will probably give you a reasonable interest rate and a higher loan amount.
If there are some reasons to be less confident, they will probably hike up the interest or put a limit on your loan amount. There are no industry standards for this loan approval process, but most companies follow guidelines given to them by federal agencies, mortgage insurers or investors.
To begin the mortgage application process, there will be an interview. A representative of the lender will sit down with you, the home buyer, and discuss the potential loan. Sometimes the mortgage company will not mandate a face-to-face meeting, in which case you will have to request one if you so desire. Some lenders are much more lenient about approval and will even approve you before you start shopping for your home. Others are much more strict and careful. It varies according to the company and the applicant.
When you go to the initial interview, take your home purchase contract, a certificate of eligibility from the Veterans Administration if you want a VA loan, bank account numbers and addresses of your branch banks, credit card bills from the past couple of years, pay stubs and W2 forms or other proof of employment, and if self-employed, balance sheets, tax returns and information about your business.
More than any of the documents, the loan application is what carries the most weight. The lender wants to go over the application and verify the information. If everything checks out, the mortgage company will probably inform you that you are approved and tell you what loan you are qualified for.
You should be told as soon as possible (usually at the first interview) what size loan you are able to obtain or not obtain, especially if you are not qualified for the loan amount you request. After the interview, the lender will review all of the information and probably get back to you within one to two weeks.