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Pre-qualification starts before the loan process actually begins, and is generally the first step after initial contact with the loan officer.
The lender gathers information about the member’s income, debts and other relevant information to help make a determination about how much the member qualifies for in order to purchase a home. Different loan programs may allow for different values, so it is important to obtain a pre-qualification for each type of loan program that is suitable.
How Much Can You Afford?
Total Principal and Interest Charge*
Various fees and down payments are discussed and the member will receive a Loan Estimate (LE), which itemizes the rates and associated costs for the loan. This document will be sent to the member within three days.See Suggested Documents
The processor reviews the member’s credit reports and verifies his or her debts and payment histories as the VODs and VOEs are returned. Should there be any unacceptable late payments, collections for judgments, etc., a written explanation will be needed from the member. The processor also reviews the appraisal, survey and looks for property issues that may require further review.
The underwriter is responsible for determining whether the combined loan package passed over by the processor meets all the required guidelines. At this time, if more information is needed, the loan is put into “suspense” and the member is contacted to supply additional documentation.
During this time the title insurance is ordered, all required approval contingencies are met, and a closing time is scheduled for the loan. A Closing Disclosure (CD) statement, which itemizes the final rates and associated costs for the loan will be issued for your review.
At the closing, the lender “funds” the loan with a cashier’s check, draft or wire to the selling party in exchange for the title to the property. This is the point at which the member finishes the loan process and actually buys the house.
- Adjustable Rate Mortgage (ARM)
- A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. It is also sometimes referred to as the renegotiable-rate mortgage, variable-rate mortgage, or Canadian-rollover mortgage.
- Adjustment Interval
- On an adjustable-rate mortgage, it is the time between changes in the interest rate and/or monthly payment — typically one, three or five years, depending on the index.
- Loan payment of equal periodic payments calculated to pay off the debt, as well as the accrued interest on the outstanding balance, at the end of a fixed period.