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Mar 16, 2008
Behind The Scenes Of Home Mortgage Applications: The home mortgage originator has reviewed your application and all of the lines have been signed and dated by the mortgage applicant(s). Now is the time to ask about the length of the approval process and potential closing dates. Most of the time, this process is completed in 30 days or less. If you need to provide additional information or have applied for a specialty home mortgage (FHA or VA) the approval process may be extended.

Now, your home mortgage application is ready for a trip - with many stops, twists and turns. A mortgage specialist is assigned to your application and the first action involves the dreaded credit report and score.

The Cold, Hard Truth About Your Financial Responsibility: First-time home buyers are expected to have some kind of credit history, even if your only financing is a student loan or your car loan. When you have been diligent about making your payments before the due date and your FICO credit score is above 695, you could sail through this part of the process unscathed. However, if your score has been compromised by skipped or late payments then you have some explaining to do . . . in writing.

If your home mortgage specialist stumbles upon a credit score below 500, a denial letter will be forthcoming. The law says that you can have a copy of your credit report and if you find anything amiss it should be dealt with immediately and in writing to the credit bureau and a copy goes to your mortgage specialist. Corrections could actually jump a credit score by 100 points. This task slows the approval process; however, it will be worth the wait over the long term.

The Property And The Price: The next step is a review of your Offer To Purchase the property of your dreams. That property information will be reviewed, an appraisal done and the property sale price evaluated. If the property is overpriced, you may be required to increase the amount of your down payment to compensate for the difference between the appraised value and the selling price of the property. Remember that your Offer To Purchase had contingencies attached to it.

Two of the contingencies that always should be there: a home inspection and your ability to obtain the indicated mortgage amount. The failure of either of these could release you from any commitment to purchase the property.

At this point, you can exercise another option and that is to counter-offer the price. While all of this is happening, your home mortgage specialist will usually hold your application for a specified time period pending the outcome of your efforts.

You're Approved!: Your assets (insurance, bank accounts, retirement accounts) will be confirmed, your work references contacted and your personal references noted.

When all of the requirements fall neatly into place, you would be contacted, both in writing and by telephone, of the approval and given a settlement date and place where you will complete the process of purchase. You are now a homeowner with a home mortgage and specified monthly payments. Meeting these payments responsibly means that you will be able to enjoy your investment for many years to come.
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