Home Buying Basics: How mortgage loan process works.

Mortgage Loan Process

The loan application that you have submitted goes through a process of review before the lender gives his or her approval. The lender appoints a person, who is known as underwriter, to judge your creditworthiness. The mortgage underwriter verifies your loan application and gives green or red signal to the lender. After the lender approves the mortgage, he/she decides upon the date of closing. The closing involves the signing of legal documents including a mortgage note which obligates you to repay the loan on time.

At closing, the lender requires you to pay the costs of originating and processing the loan. You will also have to deposit property taxes and insurance premiums into an escrow account which ensures that these payments will be paid on time. The remaining part of the taxes and insurances are paid along with the monthly mortgage payments in order to protect the lender from tax liens and uninsured losses.

To sum up, mortgage loan helps you in fulfilling your dream of owning a home. The loan however has to be paid off within a specified time period known as the loan term that varies from 10 to 40 years. Again, while you are repaying the mortgage, the title of ownership of the property still remains with you. But if you fail to pay off the outstanding balance, the lien created in the mortgage allows the lender to take away your home. He or she gets the right to sell off the property in order to get back the loan balance.

You may apply for a mortgage with a bank, a credit union or a broker, depending upon your requirements. But you should have detailed information about mortgages and you need to shop around for the best loan package, that is, which offers a reasonable rate and does not require extra charges in the form of hidden fees.

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