Real Estate Mortgage Loans
Real Estate Mortgage Application Process
Buying a home is probably the most important purchase you will
ever make. Typically, you will need financing to make purchasing a home a
reality. This financing need begins the mortgage process.
When you stop in to see us, we will assign you a loan officer to guide you
through the mortgage application process. Our officer will answer all of
your questions, keep you up to date on your loan's status, and help you
organize all the financial information we require. The mortgage
application process generally takes about two to four weeks, however
approval of your mortgage is usually communicated to you within two weeks.
To assist you in understanding the application process, please review the
following information which explains the mortgage application process from
start to finish.
Qualification
Our loan officer will lead you through the preliminary questions. Your
answers will determine your loan needs and the mortgage product which is
right for you. We utilize two ratios in this analysis.
Debt ratio compares all of your monthly debt payments to your monthly
gross (pre-tax) income.
Housing ratio compares all your monthly housing expenses to your monthly
gross (pre-tax) income.
Once this analysis is complete, we start the actual application. Detailed
information is required about yourself and the property you wish to
mortgage. Although this personal information is highly confidential, it is
imperative that the information given be truthful and complete. This will
ensure that your loan application and processing will progress smoothly.
We will ask you to provide supporting documentation such as bank
statements, paystubs, and tax returns. We will also need you to sign
documents for verification of employment and bank accounts that will be
needed during processing.
Our loan officer will provide you a Good Faith Estimate of the settlement
charges for closing your loan. You will also be provided a
Truth-in-Lending disclosure that states the APR (annual percentage rate)
and estimated payments, and a settlement booklet. The settlement booklet
explains the fees involved with a mortgage loan.
Processing
The mortgage staff at the bank will then make sure all of the information
is accurate, complete and meets certain marketing. At this time, we will
order credit reports, appraisals, and verifications. When the file is
complete, it will be returned to the loan officer for approval.
Approval
This process determines whether or not your mortgage loan will be
approved. The loan officer will review all of the documents for
completeness, accuracy, and legibility. The file is then analyzed for four
factors: collateral, capacity, character, and capital.
Collateral is the estimate of the property's
value and physical condition. This value determines the maximum mortgage
possible for this property.
Capacity are the financial resources available
to you and your ability to make monthly house payments.
Character is determined by your credit history.
This history serves as a barometer of your desire to make your house
payments. A history of bad credit does not mean automatic denial but you
must be prepared to explain this history to your loan officer.
Capital is the amount of liquid assets available
to make the necessary down payment and pay the closing costs that are
associated with your loan.
After this review is complete, the loan officer will make a recommendation
to the Loan Committee of the Board of Directors. The recommendation will
be either to approve, approve with certain conditions, or deny your
request.
The Loan Committee will review the mortgage package and either support the
loan officer's recommendation, request more information, or reverse the
loan officer's recommendation.
If the loan is approved, the mortgage package is signed, dated, and sent
off for closing. You will receive a confirmation of the approval with a
written mortgage commitment. If the loan is denied, you will receive a
written notice of denial.
Closing
The final step in the mortgage process is the preparation of mortgage
documents for final transaction, signatures and recording.
Your mortgage is now official and title to the property passes to the
buyer. You now are the legal owner and have a legal obligation to repay
the mortgage debt on the property.
If you are interested in applying for a loan from the Farmers & Merchants Bank & Trust, please stop in, telephone, or e-mail us a request using our Contact Us page.
