Obtaining Home Mortgage Loan Approval
Whether you’re a first-time homebuyer or seasoned investor, the mortgage approval process can be an overwhelming adventure without a proper road map and a good team in your corner. To some potential buyers, the prospect of meeting a mortgage lender may seem a little scary. Lenders ask a lot of questions because they want to help you get the best mortgage they can for you and your family.
Mortgage lenders approve borrowers for a loan, which is secured by real estate, based on a standard set of guidelines that are generally determined by the type of loan program. Your loan representative will instruct you to provide the required supporting documents. The following bullets are the main components of a mortgage approval:
- Credit – Lenders use credit scores and history as a tool to determine the estimated risk associated with a borrower.
- Loan-to-Value (LTV) – Loan-to-Value, or LTV, is a term lenders use when comparing the difference between the outstanding loan amount and a property’s value.
- Debt-To-Income (DTI) Ratio – A borrower’s DTI Ratio is a measurement of their income to monthly credit and housing liabilities. The lower the DTI ratio a borrower has (more income in relation to monthly credit payments), the more confident the lender is about getting paid on time in the future based on the loan terms.
- Employment history– Job stability is a factor that a mortgage lender will look for,
- Appraised value of the house– The lender wants to make sure that the value of your home would support the amount of your mortgage.
The loan representative will then submit your loan application, along with the documents, to the underwriter. Today an automated underwriting system is becoming more and more popular, enabling lenders to obtain a risk classification without traditional manual underwriting. Though many believe that automated underwriting saves borrowers time and money, Fairway Independent Mortgage of the Carolinas has in-house underwriting providing us with increased control over the mortgage process ensuring superior customer service.
Soon thereafter, the underwriter will return one of four possible decisions about your application: approval, approved with conditions, suspended (more documentation required before a decision can be rendered), or denied.
If you have been approved, with or without conditions, one more critical task is to lock in your interest rate and loan terms. With a rate lock, lenders are obligated (with a few exceptions) to offer a home loan at an agreed-upon rate regardless of whether mortgage rates have changed between the time of the loan approval and the closing date.
From there, you are cleared to make an offer on a house with full confidence that you will be able to close the deal. Nevertheless, it’s still up to you to do everything you can in order to ensure that your closing goes smoothly. With our seamless process and excellent communication, Fairway is sure to be the best decision you have ever made. Don’t take our word for it, read our reviews!
With interest rates dipping down, now is the time to consider all of your options. Whether you are buying a new home or looking to refinance your current home, you can trust Fairway Independent Mortgage of the Carolinas to make your home loan as stress-free as possible. Call one of our four offices today to get started. We have locations in Matthews, Ballantyne, Lake Norman and Mooresville to make meeting convenient, or simply fill out our online application to get started.