If you are a new homeowner the mortgage world can be intimidating. Mortgages are simply a loan that is secured by your home. The mortgage lender places a lien on your home and if you default on the loan that lender will foreclose on your property. When the lender forecloses your home they will take possession and sell your property at auction to recover their losses.
When you first apply for a mortgage your lender calls this loan origination. If you are still shopping for a mortgage it is smart to shop from a variety of lenders and mortgage brokers to find the best deal for your money. Terms, conditions, and interest rates vary widely from one mortgage lender to the next.
When you apply for the mortgage loan there can be a significant amount of paperwork and documentation you will be required to submit. Your lender may require a survey, appraisal, homeowners insurance, and sometimes private mortgage insurance. You may be required to document your income and bank account balances. The underwriting process your mortgage lender goes through could last from anywhere to a week to several months if there are complications.
Once your mortgage loan is approved you will close by signing the final agreements. If you are receiving any cash back your mortgage lender will issue you a check. Once your mortgage loan is finalized there is a good chance your originating lender will sell your loan to another finance company. Lenders do this frequently for a variety of business reasons; this should not affect your monthly payment as the contract you signed is binding for the duration of the loan. It could however, impact the level of customer service you receive from the new lender.
As long as you pay your mortgage payment on time you should not have problems with the lender. If you are using an escrow company for your taxes and insurance you could run into problems down the line when your property taxes change; good escrow companies are hard to find. If you can talk your lender into foregoing escrow for your property taxes and insurance you will be better off in the long run.
Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker. He is the owner of Mortgage Refinance Advisor, a mortgage help resource site devoted to saving homeowners money with a free guidebook “Five Things You Need to Know Before Refinancing a Mortgage.” http://www.refiadvisor.com
