Researc

Mortgage Processing: Application

NMLS National Exam Topics in this Lesson

II. A. Mortgage programs III. A. Application information 1 Accuracy 2 Suitability 3 Disclosures

Overview This lesson provides an overview of the processing of a loan application, from

prequalification to underwriting.

Objectives At the conclusion of this lesson, the student will be able to:

1. Define loan origination and loan processing. 2. Explain the process for originating a mortgage loan, from prequalification to submission to underwriting. 3. List the elements of the Uniform Residential Loan Application. 4. Explain how to complete the Uniform Residential Loan Application. 5. Describe the documentation required for a full-doc loan.

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Mortgage Processing: Application

Most real estate transactions are contingent upon the purchaser approving an inspection and being approved for a loan. Most mortgage lenders require that there be collateral in the form of property and that it be of sufficient value to secure the amount of the loan. This means a buyer will be spending money for an inspection or appraisal. Before he does, he should inquire as to whether he can qualify for the financing to buy that property. His inquiries can involve prequalification or preapproval. Prequalification is an estimate of the amount of a loan for which the buyer can qualify based on his statements regarding his financial condition. Preapproval generally consists of a letter from the mortgage loan originator showing an estimate of the amount of a loan for which the buyer can qualify based on verification of his income and assets. It is more substantial than prequalification, but it is still not loan approval, as final approval is subject to: • the property he wants to buy: o having the value to support the loan (evidenced by an appraisal). o having marketable title (evidenced by a title report). o being in suitable condition (in some cases,...