Mortgage Lending Lifecycle Overview
The mortgage lending lifecycle, also known as the mortgage loan process, is the series of steps involved in securing a mortgage loan for a borrower.
The mortgage lending lifecycle typically includes the following steps:
Pre-approval: This is the initial step in the process where the borrower submits a loan application to the lender and the lender reviews the borrower's financial history and credit score to determine if they qualify for a loan. If the borrower is pre-approved, they are issued a pre-approval letter, stating that the borrower has undergone a preliminary assessment and is likely to qualify for a specific loan amount based on their financial information.
Property search: After the pre-approval process, the borrower searches for a property that meets their needs and budget.
Purchase agreement: Once the borrower has found a property they want to purchase, they will enter into a purchase agreement with the seller.
Loan processing: After the purchase agreement is signed, the lender will begin processing the loan application. This includes verifying the borrower's financial information, ordering an appraisal of the property, and reviewing title and insurance documents.
Underwriting: After the loan has been processed, the lender will submit the loan application to an underwriter who will review all the information and make a decision on whether or not to approve the loan.
Closing: If the loan is approved, the borrower will attend a closing where they will sign all the necessary paperwork to finalize the loan.
Repayment: After closing, the borrower begins repaying the loan on a monthly basis. This includes making principal and interest payments, as well as paying property taxes and homeowners insurance.