Taking out a mortgage usually requires a significant loan on the part of the lender. As a result, it’s no surprise that there are so many people involved when it comes to processing a home mortgage. In addition to the loan officer–the person who convinces you to apply for a loan on behalf of the lender — your loan application will be viewed by a loan processor and a loan underwriter as well.
What Do They Do?
It can be easy to confuse the roles of a loan processor and a loan underwriter. A loan underwriter carefully evaluates the borrower’s application and all of the documents along with it to determine whether the lender should approve the loan that was requested. Before they do this, the application and all of the accompanying paperwork must go through the loan processor, who checks to make sure all of the information provided is accurate and complete.
Their Critical Role
The job of the loan processor is extremely important as they are the ones who make sure that all of the required documentation has been provided and that there’s no missing information. If you’re missing paperwork or information, they will contact you. They will use the information you’ve given and double-check it to make sure it’s accurate as well. Additionally, they are also responsible for obtaining certain information and completing certain tasks so that your application is ready to be reviewed.
What They Check
The following are some of the things that a loan processor will check before they sign off on the application and all of the information you’ve provided and move it on to the loan underwriter to begin the review process. Besides checking the veracity of the documents and the information contained within, they may contact you if any of the following information isn’t provided.
Proof of Employment
You are required to be employed in order to qualify for a loan. This ensures that you will be able to make your monthly mortgage payments. The processor will check the employment information that you’ve provided and contact your current employer to verify that you do have a secure job. They may also verify your income when they speak with your employer as well to make sure that you can afford to take out a mortgage.
Proof of Assets
The loan processor will look over your statement of assets and debts. These should include current statements for all of your banking accounts (such as checking accounts and savings accounts) as well as all investment accounts that you’ve listed on your application. They will also look at any loans that you’re currently paying off as well. The loan processor may contact you if you don’t have current statements for anything listed on your application. They may also request past statements.
They will look over all of your income as well as evaluate all of your debt (including credit card balances, loan debt, and expenses) to make sure your debt-to-income ratio is accurate. To determine the veracity of your income, they will look at any W-2s, paystubs, bank statements, and past tax returns.
While homeowner’s insurance is not required by law, it is required by mortgage lenders. This means that before the home loan can go through, you will have needed to obtain homeowners insurance. The loan processor will check your documentation for proof that you’ve secured homeowner’s insurance.
The lender will not want to provide any loans that are more than the value of the house being purchased. The lender will order an appraisal by a professional to make sure that the asking price is fair and that the house is not overvalued. If it is, the lender might have difficulties recouping the balance owed on the loan if the borrower defaults since they would have to auction it off for more than its value. The loan processor is in charge of ordering the appraisal.
Ordering Credit Reports
Your credit report is a thorough accounting of your payment history. It shows if you’ve paid your bills and debts on time and in full, how much debt you’re currently paying off, and whether there are any red flags (such as previous foreclosures, bankruptcies, or debts that went to collections due to nonpayment). The credit report gives the lender a good idea of how big of a risk you are as a borrower and how financially responsible you are. The loan processor is in charge of ordering the credit report.
Ordering Payoff Information
A loan processor will only order payoff information if you are refinancing your home. Basically, they will contact the lender of your existing mortgage to find out how much you still owe on your current home loan. This helps the loan processor determine how much should be charged on a monthly basis.
Advantages to a Good Relationship
It’s a good idea to maintain a good relationship with your loan processor. This means speaking with them politely and patiently as well as simply making yourself available to them. If they contact you, they may require additional information. Give it to them as quickly as you can to keep the home loan process moving.
If you have a good relationship, the loan processor will be more likely to help you out if certain challenges arise. For example, you may have listed alimony as a form of income but you may have difficulty proving it because you don’t keep copies of your checks or deposit it in a separate account. The loan processor could potentially find a way around this so that you can still report your alimony as income, like ordering copies of the deposits you made from your bank.
If you’re rude or treat them like they are inconveniencing you when they need more information, they may be less inclined to find solutions to such issues. And then you’ll be in trouble since your loan won’t be able to move forward.
The Home Loan Process
If you need a home loan, it helps to familiarize yourself with the home loan process. This way, you can prepare everything you need when speaking with the loan officer. If you know what information and documents will be required from you, then you can begin collecting it before you go to a lender to submit an application. This will make the process go much quicker–and the faster you can get approved for a home loan, the faster you can buy that dream house.
Tips for Quick and Painless Mortgage Processing
The following are a few tips for making sure your loan application is processed as quickly and with as few issues as possible:
Order a credit report – Although your lender will order a credit report, you should order one as well. This will provide you with your credit score, which you will need to supply on your application, as well as give you a chance to go over your credit history to make sure there aren’t any errors. You’ll want to report errors so that they can be removed, otherwise, they may hurt your ability to qualify for a mortgage.
Get your paperwork together – You will need to provide a number of documents to your loan officer to go along with your application. These documents include a copy of your photo ID, bank statements (and statements for any other assets you have), two years worth of tax returns, proof of income (such as W-2s or pay stubs), and gift letters (if you’re being given money by someone for the deposit).
Communicate with your lender – Don’t just wait for your lender to keep you up-to-date on the loan process. Contact them after you’ve submitted everything to get an update yourself. Some lenders may have a heavy workload and may not think to check on the progress of your loan. Reminding them can help get your loan approval moving right along.
Inform lender of any changes – If any changes occur in your life that affect you financially (such as if you’ve lost your job, you got a new job, you got a raise, you’ve been promoted, or you’ve taken on more debt), let the lender know right away. These changes can affect your approval and can delay the mortgage process.
The mortgage application and approval process is a lot more involved than you might realize. It doesn’t just start and stop with your loan officer. In fact, one of the most important parts of the approval process is when your loan application is handed over to the loan processor. Knowing what the entire loan process entails and maintaining a good relationship with your loan processor can help ensure that your loan application isn’t rejected due to a mistake or a lack of information and can help speed up the approval process.
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