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The Mortgage Loan Process 101

We've described below the mortgage loan process from start to finish, including finding the right home loan, applying for your home loan, choosing between fixed- and adjustable-mortgage rates and closing your home loan.

1. Loan pre-qualification
Not sure how much home you qualify for? We can help you determine approximately how much money you will be eligible to borrow before applying for a home loan. Preapprovals are formalized evaluations of your credit, income and assets that let you know the price range you can afford for a home.

2. Finding the right home loan
The second step in the mortgage loan process is finding the right home loan. We'll help you choose the best home loan for your needs based on three key factors:

  • How long you plan to keep your home
  • How much you need to borrow
  • How much financial risk you're willing to accept

3. Mortgage loans and down payments
The next step in the mortgage loan process is determining your down payment, which depends on the amount of cash and assets immediately available to you. Most home mortgage loan programs have minimum down payment requirements based on the amount you need to borrow compared to the actual value of the home. This is commonly known as the loan-to-value ratio or LTV for short.

The bigger the down payment, the lower your LTV will be. A low LTV not only gives you a better chance of a home loan approval, it also can affect the interest rate of your home loan, thus lowering your monthly mortgage payment.

4. Applying for a home loan
Applying for a home loan can be easy. The application will ask for personal, property, employment, assets, income and liability information.

5. Mortgage loan application and underwriting
Once you've completed the application, we'll prepare a full loan application and disclosures, which we will need to, submit your loan for an underwriting approval. When we have the necessary documents, we will send your loan file to our request an approval to close your loan. After Underwriting reviews and accepts all documents and information, you are ready to close on your mortgage loan.

6. Home inspection
The next step in the mortgage loan process is often a home inspection. You will want, and your mortgage loan may require, a home inspection by a qualified professional. The home inspection is not an appraisal. It's an evaluation of the general quality of the home that details the structural condition of the house and the life expectancy of the major systems, such as plumbing, heating, electrical, etc.

8. Conditional loan approval of your mortgage loan
A conditional approval, if approved will be issued identifying specific requirements that must be met before a final approval is issued and your loan is cleared to close.

9. Private mortgage loan insurance
Depending on the size of your down payment, especially when the LTV of your mortgage is more than 80%, you may need to insure the mortgage loan with a policy that protects the lender against default.

11. Title insurance
To get a home loan, a title insurance company will need to research the deed to the property you are purchasing to confirm that there are no liens against it and the seller is able to deed the property into your name. This is a one-time expense to guarantee that the seller legally owns the property and that there are no outstanding legal or financial claims against it.

12. Homeowner's insurance
You are required to be insured against unexpected hazards.  Prepayment of the first year's homeowner's insurance will be part of your closing costs, while your ongoing insurance premiums will become part of your monthly mortgage loan payment.

13. Mortgage loan closing costs
Closing costs typically total between 2% and 5% of the purchase price of the home. These mostly one-time fees typically include the following:

  • Appraisal
  • Credit cost
  • Title insurance
  • Closing transaction fee
  • Loan origination fee
  • Discount points
  • Recording fee
  • Commitment fee

14. Prepaid/escrows
These pre-paid expenses include property taxes, homeowner's insurance premiums, association dues (if applicable) and pro-rated interest. The lender collects these funds to ensure your taxes and insurance are paid on time, on your behalf.

15. Mortgage loan closing
This is the final step in the mortgage loan process. A date and time convenient to you will be coordinated with the settlement agent (title company or attorney) and the sellers, if applicable, to close on your home mortgage loan.
The closing will take place at the title company, attorney's office or escrow office. To close the loan, you will need a valid ID and will need to do the following:

  • Bring certified funds totaling the down payment, closing costs and prepaid items.
  • Sign all the applicable documents.

The HUD statement will be included in the final closing documents. Once these documents are signed, you will not only receive a copy of every document, but also the keys to your new home.

 

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NMLS 4855; Regional Home Mortgage; HUD-FHA Approved Correspondent Lender, Equal Housing Lender, Licensed Correspondent Lender by the NJ Department of Banking and Insurance. Registered Mortgage Broker-NYS Banking Department, loans arranged through third party providers, Licensed Correspondent Lender by the Connecticut Department of Banking, Licensed Correspondent Mortgage Lender by the Pennsylvania Department of Banking, Licensed Correspondent Lender by the Florida Office of Financial Regulation. Licensed by the DOC under the California Residential Mortgage Lending Act. Any information provided to Regional Home Mortgage is considered confidential. © 2010 RegionalHomeMortgage.com - All Rights Reserved. | Licenses and Disclosures