Understanding The Legality Of A Mortgage Approval

Understanding The Legality Of A Mortgage Approval

A mortgage can be termed as a loan that is taken to facilitate the purchase of a home or property. Most mortgage loans take up to 25 years to pay off. They can, however, be longer or shorter depending on the set terms.

To better understand the legality of a mortgage approval, you will need to familiarize yourself with the entire process of making a mortgage loan application. Here is a detailed overview:

  1.   The Prequalification Stage

The lender gathers enough information about the borrower for how much he or she earns and how much debt the person owes. A decision is then made on how much the person is able to pay for a house depending on the valuation made.

  1.   The Application Stage

In this stage, the borrower with the help of a trained professional fills in an application form and avails all the required documentation. There are different kinds of fees along with closing cost estimates that have to be paid by the borrower when submitting the application form to the lender.

  1.   Receiving The Loan Estimate

A loan estimate is a 3-page long form that a person is issued with after making a mortgage application. It gives the borrower important information with regards to the mortgage loan such as the estimated interest rate, the basic monthly payments, and the overall closing cost of the loan.

It also gives the borrower information about the projected costs of insurance and the taxes to be paid along with the expected future fluctuations in interest rates. Other details such as penalties for making early payments and the increases that are added to the loan balance are also availed in the loan estimate document.

Each lender uses a standard loan estimate form. This allows the borrower to easily compare mortgage loans and make a choice based on which option best suits him.

After receiving and reviewing the loan estimate, the borrower then makes a decision on whether or not to proceed with the mortgage application process.

  1.   The Processing Stage
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Once the application is done, the mortgage process begins. The processor requests for the Credit report, the Appraisal, and the Title Report. The information provided on the application such as the bank deposits and the payment histories is then verified. The Appraisal and the Title Report are also closely examined to check for any property issues.

Once this is done, the mortgage package is compiled and submitted by the processor to the lender.

  1.   The Underwriting Stage

Once the mortgage package is completed, an underwriter takes charge to determine whether or not the package is an acceptable loan.

If more information is required, the loan is put under suspense and the borrower is requested to provide additional information. If the loan is accepted, it is placed under the approved status.

  1.   The Closing Disclosure

This is a 5-page document that gives all the final details of the selected mortgage loan. It has in it the loan terms, the defined monthly payments, and the closing costs to be incurred.

The closing disclosure is by law required to be issued to the borrower 3 days before closing on the mortgage loan. These 3 days give the borrower ample time to make any necessary consultations before finalizing the process.


You are now well informed on the legality of a mortgage approval. Need to apply for a mortgage? Check out www.altrua.ca for the lowest rates, a wide array of options, and the best mortgage advice.

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