After your offer to purchase the property has been accepted and you have identified the lender you will use, your next step is to apply for a mortgage loan.
Initial
Interview – Typically, the initial interview will be held in the lender’s
office and takes about an hour. During
the interview the lender will ask questions related to income, expenses, credit
history, employment and the terms of the offer to purchase the property.
Some lenders permit the initial interview to be conducted over the
telephone. At the conclusion of the
interview, you will have 1) completed an application, 2) been pre-qualified by
the lender, 3) paid a fee for the credit report and appraisal, 4) received a
list of additional information needed for loan procession, 5) received the HUD
handbook on settlement costs, and 6) received an ARM disclosure (if applicable).
Mortgage
Loan Application – is in essence an application supplied by the lender for the
borrower to apply for a mortgage loan. A
checksheet summarizing the information that most lenders require is included at
the end of Section III of this module in your Guide.
The completed application must be signed and dated by you.
A sample copy of the Loan Application is included in the Forms and Work
Sheet section of your Guide.
Pre-Qualifying
– Once you have completed the mortgage loan application, the lender will
perform pre-qualification calculations to determine whether your monthly income
is adequate enough to support the monthly payments on the loan amount you
requested. Some lenders at this
point may also run an in-file (one repository) credit report to determine
whether there are major credit problems that would prevent you from being
approved for the loan. The
pre-qualification process involves simple calculations that you can perform
prior to ever applying for a mortgage. It
should be noted at this point that pre-qualification is not to be confused with
pre-approval. Pre-qualifying merely
lets the lender know “how much” mortgage you would qualify for under certain
mortgage conditions based on your gross monthly income.
The
pre-qualification worksheet and sample factor table can be used to determine the
loan amount that you could qualify for based on your gross monthly income.
Using the example below and the Sample Factor Table provided, fill in the
blanks and complete the worksheet by performing the simple calculations as
instructed on the worksheet.
Example:
Borrower
and Co-borrower – Mr. & Ms. Atlast
Gross
Monthly Income (both) - $3,600.00
Total
Monthly Debt Payments - $612.00
FHA Qualifying Ratios –
-housing
is 29%
-total
debt is 41%
Term
on the mortgage is 30 years
8% fixed interest rate
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