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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, payment history, your credit score if known, employment and the terms of the offer to purchase the property.  Some lenders permit the initial interview to be conducted over the telephone. Many home buyers today start the process with an internet based mortgage loan application followed up by email or telephone contact.   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.


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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Table of Contents | Homebuyer Course Start Page | Find A Realtor | Budgeting To Buy a Home | Neighborhoods | Find Your First House | Inspect Before You Buy | Shop For a Mortgage Loan | Mortgage Home Loan Process | Credit Score and Credit Report | Home Mortgage Loan Closing | Being a Home Owner

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