How the mortgage lending industry works.
The Mortgage Lending Process
A mortgage simply is a financial debt instrument that will act to secure a loan for you to get that home. In exchange for that money, the mortgage lender will first put up a lien on the prospective property for the loan amount. If you happen to default on the monthly payments, the lender will be able to foreclose and have the right to sell the home to recover the debt amount.
For the mortgage lending industry, when you apply for a mortgage, it is known as ‘originating’ a loan. To originate the mortgage loan, you will initially have to find a financial lender you are comfortable with, and they comfortable with you. You may have already established a close relationship with a financial institution or bank, and that should suffice. Many others however, find it a better idea to just deal with a mortgage broker who will shop for the best loan that meets your specific needs and situation. Different lenders will often offer different terms and loans.
As part of the ‘originating’ process, you’ll be required to fill out a lengthy loan application form. Depending on the exact nature of the loan, you will probably also be required to submit additional documentation that supports your household income claims, assets and so on. There are no partial document or document loan applications, but most won’t qualify for them anyways. Once you submit your mortgage application, the lender will inevitably ask you for more information or documentation. Depending on the mortgage lenders review process, known as ‘underwriting’, the lender will then decide to either decline or accept the application. At times, the lender may add stipulations to the loan that will cover issues that they are concerned with.
You Finally Get That Mortgage
Your mortgage at some point in the future will be eventually terminated. One reason will be the resale of the home, refinancing the home or just simply you paying off the balance. Other reasons for termination can be defaulting on the loan or bankruptcy. Regardless, this is the basic process and structure of the mortgage lending industry from start to finish.