Guide 3. Step by step through the loan application process

Home Loans

Purchasing a home can be stressful, and the loan application process can substantially add to that stress if you're not familiar with the loan application and approval process.

The mortgage loan process can take anywhere from days to weeks to complete, and not understanding what stage of the application process you are in can cause you undue frustration. Below are some fundamental steps of the mortgage approval process. These steps will help you understand what's happening during your loan application and approval process.

Step 1 – Application
The first step in your application process is obviously the application. This is the point in the application process when you give all of your information to your mortgage broker. Your mortgage broker will be asking you a lot of questions, many of which may seem personal, but are necessary in order to approve your mortgage loan.

Step 2 – Credit history and application verification
After you have submitted your mortgage loan application, the lender will normally review your credit history and verify your income and job history. Your lender may also conduct reference checks to analyse your ability to pay the lender in a timely manner.

Step 3 – Property appraisal
After your credit has been reviewed and the information on your application has been verified, the lender will usually order a property appraisal in order to determine the value of the property you are purchasing. The lender does this in order to ensure that the property is worth the price that you are paying for it. If the value of the property turns out to be less than what you are paying, the lender may decide to loan you less money than you are applying for.

Step 4 – Loan review
An underwriter will review all of your loan application data including your credit history, your income, and the value of the property you are purchasing. If the application package meets the lender's underwriting guidelines, you will be approved for the loan and a settlement date (when the lender will be funding the loan) will be established.

If, at any time during the mortgage application process, you have any questions as to the status of your loan application, a call to your mortgage broker can help clarify the situation for you. When working with an experienced mortgage broker, he or she will be able to assist you throughout the entire mortgage application process.

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