What Happens When You Apply for a Mortgage?

What Happens When You Apply for a Mortgage? by Laraine E. Schwartz, Esq.When applying for a mortgage, what does "pre-approval" mean?

To begin the process of purchasing a home with a mortgage, the lender will typically provide a pre-approval letter before looking deeper into your financial situation. You first submit a short application to ascertain if you have sufficient funds to meet your monthly expenses including the mortgage, insurance and taxes, as well as other monthly charges.

When applying for the mortgage the following will be requested:  

  • Credit reports

  • Pay stubs

  • Employment letters

  • Rental letters if you have been renting (certifying that you have been paying your rent on time)

  • Bank statements or proof of a savings account where your money is deposited

After submitting these documents, an initial assessment will be conducted to determine qualification for the mortgage. Your application will be sent to an underwriter who will request further documentation, looking for anything that might be a red flag as “too high a risk” that they may not want to undertake. If potential issues are found, the loan might be denied or the lender may condition the loan in a certain way to reduce the degree of risk involved.

It is important to have an experienced realtor to help you through the process. Realtors are familiar with the buildings in the area, and know which ones have been approved so that you will not have to devote your energy and time, only to be rejected later on in the process. They can also help you obtain the necessary documentation to satisfy lenders’ inquiries. And when it comes to crunch time and the deal must be approved by a lender, or it has to be FHA-appraised, realtors will set up and coordinate appointments to make sure that all the necessary parties are present for the required inspections to be carried out.

Larraine Schwartz, Lobbying for Immigration Reform

Laraine E. Schwartz, Esq.
Winograd and Schwartz Attorneys at Law, www.winogradandschwartz.com

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