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LOAN PROCESSING Previous Page | Next Page

 

Once the loan application has been submitted, THE WAIT begins.  It can take up to six weeks for you to receive a loan approval.  During the wait between application and approval, it is common for buyers to be apprehensive.  However, “NO NEWS IS GOOD NEWS.”  If the loan processor has a problem or needs additional information, you will be contacted by telephone or mail for this information.  If working with a housing counselor, have him/her occasionally check with the lender on how things are going.  However, don’t make a habit of calling the loan officer or loan processor too often.  It will only cause delays.

During the loan processing phase, the lender is confirming and verifying the information you provided.  For example, the Verification of Employment and Verifications of Deposit are sent out, the appraisal and your credit report are ordered, your application and supporting documentation are reviewed, etc.  As the lender receives confirmation of the information you provided, loan processing is continued.

Monthly Income – Monthly income refers to the “Gross” amount of income you receive monthly.  If you are paid an annual salary, it’s that salary divided by 12 months.  For example, if your annual salary is $36,000 a year, your monthly gross income is $3,000 ($36,000 divided by 12 months).  If you are paid on an hourly basis and work 40 hours a week, your gross monthly income is computed by multiplying your hourly rate by 2080 hours and then dividing by 12 months.  For example, if your hourly rate is $10.00 an hour, your monthly gross income would equal $10 X 2080 divided by 12 = $1,733.33.  The lender will use your gross monthly income to determine whether you have sufficient income to support the mortgage payments.  

Loan Limits & Terms – The maximum amount of money that can be borrowed to purchase a home will vary depending on the mortgage product and loan limits established for the area.  Because of these variances, you should ask the real estate agent or your lender about the maximum loan amount for your area.  It should also be noted that each borrower is expected to make a minimal down payment.  Only certain mortgage program provide 100% financing.  The term on a mortgage simply refers to the number of years that you have opted to repay the debt, i.e. 15 years, 20 years, or 30 years.  The mortgage term will greatly impact the monthly mortgage payment.           

PITI is a phrase used in the mortgage industry that refers to four components of a monthly mortgage payment.

P – refers to the principal portion of your payment.

I – refers to the interest portion of your payment.

T – refers to the property taxes portion of the payment.

I – refers to the insurance portion of the payment.

The PITI is used by the lender to determine whether you can afford the mortgage.  It is used to compute the housing expense to income ratio.  The taxes and insurance amounts paid monthly are placed in an escrow account and the lender will pay the real estate taxes and insurance premiums from that account as they become due.



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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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