Mortgage Loan Application and the Underwriting Approval Process

This article is about the mortgage loan application and approval process that requires the borrower to go through multiple stages. In this article, we will cover the following topics:

• Understanding the mortgage process
• Steps in the mortgage process
• The role of the mortgage underwriter
• Fees and costs borrowers need to pay

By the time you have read this entire article, you will understand the overall mortgage application and approval process.

The Mortgage Process Today

The mortgage loan application and approval process are different today than it was several years ago. Borrowers often do not apply for a mortgage year after year. Unless you are a professional real estate investor or a property flipper, it is safe to say that most people will go through the mortgage process every five to ten years.

Understanding the mortgage process is important.  Many borrowers hear horror stories about the mortgage process. Common horror stories include delays in the closing date, underwriters asking for conditions over and over again, and a last-minute mortgage loan denial. The loan process does not have to be stressful. The main reason for stress and delays during the mortgage process is due to the loan officer not qualifying the borrower correctly.

A pre-approval letter should never be issued unless the borrower is fully qualified. Understanding the overall loan process will avoid stress during the mortgage process. A loan officer needs to thoroughly qualify the borrower before issuing the pre-approval letter.

Applying for a mortgage requires a lot of documentation. The mortgage process cannot be completed overnight. The loan process is literally a process. It normally takes 30 days to close on a mortgage loan.

The First Step In The Mortgage Process

Once borrowers have selected a mortgage company and loan originator to proceed with processing their mortgage loan application, the loan originator will prepare a mortgage application package. The application package consists of over 50 plus pages along with dozens of additional pages of disclosures.

All of these pages will require borrowers’ as well as co-borrowers signatures. Once all borrowers have signed the mortgage loan application as well as the disclosures, the loan application gets processed. Once processed, it gets submitted to an underwriter.

Mortgage Underwriters are the decision-makers of whether a mortgage loan gets approved or denied. The loan originator will most likely know beforehand if there might be a problem with approval.

Signing Mortgage Loan Application Does Not Bind Borrowers

When borrowers sign the official mortgage application, it might seem like they are giving their life away. Literally, it is over 50 plus pages. Does signing all of these mortgage documents obligate borrowers in any way or form?   

The answer is no and we will delve more into this in the following paragraph. Borrowers can cancel their mortgage loan up to the day of the closing.

How Long Do Borrowers Have To Cancel Mortgage Loan Application?

Borrowers can cancel their mortgage application at any time during the mortgage approval process up to the date of closing.

The borrower can cancel the loan at any time. The loan application is not binding. There are no fees and costs borrowers are responsible for unless the loan closes.This holds true up to the date of closing.

The loan officer cannot charge loan applicants for the work they have done. They can only charge a commission if the loan closes. Borrowers can even cancel the day of the closing without being liable to go through with the mortgage loan. Borrowers can fire his or her mortgage loan originator at any time during the mortgage approval process.

A mortgage loan originator or lender cannot charge borrowers any origination fees or other fees if the borrower either cancels the application or the loan gets denied.

Fees Associated With Mortgage Loan Application

There should be no upfront origination fees or costs to apply for a loan or during the mortgage approval process except for the appraisal fee.

There are credit report fees. Lenders might have an underwriting fee and/or origination fee.

Borrowers are only charged junk fees only when the loan closes.

Should a borrower decide not to go through with the mortgage process, there are no fees. Lenders cannot charge any fees for a borrower deciding not to go through with the mortgage process. Borrowers can cancel at any time. They are not liable for any fees and/or costs.

Borrowers who need to qualify for a mortgage with a national direct lender with no lender overlays on government and conventional loans can contact us at Gustan Cho Associates at 800-900-8569. Or text us for a faster response. Borrowers can also email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.