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What Is A Mortgage Loan?

A mortgage loan is one kind of agreement between a lender and a buyer for buying a home. Through a mortgage, a person can also borrow money from a legal lender against the house that he/she owns.

Mortgages are an easy to borrow money as it shows an already owned property as collateral. However, there are many steps before a property owner gets the mortgage.

Types of Mortgages

There are two types of mortgages – 1) residential and 2) commercial.

1) Residential – An individual who has personal earnings and a good credit history could be eligible for a residential mortgage. Residential properties have higher loan-to-values. Hence, it could be an easy process for an individual or a legally married couple to get a residential mortgage loan.

2) Commercial – In the case of commercial mortgages, a company usually shows the property as a commercial property. Moreover, the servicing of the mortgage is also maintained by the earnings from the business (not from the earnings of an individual). To receive a commercial mortgage a company may have to go through many complicated steps.

Steps To Get A Home Mortgage Loan

Step One – Getting The Pre-Approval

A mortgage loan involves several financial aspects. Taxes, interest rates, and insurance matter a lot. The down payment of the property should also be considered. So, getting a pre-approval from a legitimate lender would be a wise decision.

Step Two – Make An Offer Once You Find A Good Property

Finding a good property is a crucial step. After inspecting the property/home if you like it, then you may deposit the earnest money. Earnest money shows that you are a serious buyer and you are genuinely interested in the property.

Step Three – Apply For A Mortgage

Now, you can apply for a mortgage to a mortgage lender. The lender will want detailed financial information about you. But the most important one would be your credit history. With a perfect credit report, your mortgage may get approved quickly.

Step Four – Loan Processing and Underwriting

To process and to approve your loan, you may have to meet an underwriter. After applying for a mortgage, the lender will verify all the documents and all the financial aspects. An underwriter makes the final decision. So, if your application is rejected, then you will get a notice from the lender.

Step Five – Closing and Reviewing

The final step would be to fill the closing disclosure form. The final closing costs and the estimated closing costs will be in front of you. The (closing) meeting and a brief review will be required to make your mortgage loan ready and active.

Applying for the mortgage and waiting for the underwriting process may seem a tedious process. But these steps are essential to own your dream property. A good credit history and your assets play an important role in getting a home mortgage loan swiftly.