Home lenders are actually mortgage lenders for home. Home mortgages can be obtained from many agencies as explained below.

There are mainly 8 steps in a lending process

• Pre-Qualification

• Product Selection

• Application

• Processing Your Loan

• Underwriting Your Loan Application

• Decision

• Loan Closing

• Loan Servicing

Let us discuss the process your new home loan goes through.

There are eight steps of the process. It starts with pre-qualification and ends up in loan servicing. These are the steps that a loan officer takes to offer a home loan.

1. Pre-Qualification

One has to pre-qualify before applying for a loan. The lending agency gathers information about your income and debts. This is to make a preliminary financial determination how much house you may be able to afford. Usually, a pre-qualification letter is issued showing the amount for which ReaLoans has pre-qualified you.

Please understand that the Home Lender will take the information that you give about your income, assets and debts in order to pre-qualify you. The pre-qualification is only as good as the information that you give, and is subject to the lenders verification of that information during the formal application process.

It's a good idea to know how expensive a home you can afford before you start shopping for one, and a pre-qualification from ReaLoans can help. If you can provide a pre-qualification letter, sales agents and sellers will know that you are an able buyer and may take your offer more seriously. A pre-qualification letter may sway a home seller to negotiate with you as opposed to another buyer who is not pre-qualified. If you are re-financing the loan on your existing home, then the pre-qualification process should help you decide whether re-financing is a good idea for you or not.

2. Product Selection

The selection of a mortgage program can be rather complicated, and are highly recommend that a mortgage professional help you with the decision process. There are a countless number of loan products available in the marketplace today, and the guidelines for these products change continually. A mortgage professional that stays current on these programs can play a valuable role in analyzing your options.

Here are a few items you need to consider before selecting a program:

How long do you plan to own the home

What is your financial outlook for the near-term and long-term

Do you have future financial obligations (such as college, retirement, elderly care) that might limit your future ability to meet debt obligations

How comfortable are you with a payment amount that changes over time

Will you consider a balloon payment

What is your liquid asset position Are you willing to make a larger down payment

Are you self-employed

How is your credit history

Are you a first-time home buyer

Will you have adequate funds available after debt payments for retirement funding and other needs

As stated earlier, there are a number of mortgage products available. The most common types are the fixed-rate programs where the monthly interest and principal payments are fixed for the life of the loan. Other programs, referred to as adjustable-rate loans, allow for the interest rate to change at specified intervals. The interest rate on adjustable-rate loans can go up or down depending on changes to the index interest rate on which the loans interest rate is based. Some adjustable-rate loans allow for a fixed period, such as one, three or five years, before the interest rate becomes adjustable. After that fixed period, the interest rate will change each year thereafter.

Another kind of adjustable-rate loan is the graduated payment mortgage, known as the GPM, where payments are fixed for only one year and will change by a specified amount annually. The advantage of the GPM is that often borrowers are able to qualify for a larger mortgage than they otherwise would, and may be able to grow into the payment if it later increases. Unfortunately, this type of program is not for everyone because many GPM programs have negative amortization, meaning that the loan balance can actually increase since the interest rate used to calculate payments in the early years of the loan is lower than the rate used to calculate the interest that accrues..

There are also mortgage products available to serve the needs of a specific type of borrower. For example, there is a product called a reverse mortgage. This is a special type of loan designed for older borrowers who want to make use of the equity in their home without selling it. A reverse mortgage allows the Home Lender to make payments to the borrower instead of the borrower to the lender. However, at the end of the term, the house is sold to pay back the amount loaned with interest. This type of program is not for everyone and there are a number of caveats that need to be considered. If you are considering a reverse mortgage, you definitely need to talk with a mortgage professional.

Another program for specific needs is called a balloon mortgage. Balloon programs are ideal for borrowers who know they will not occupy the home for long periods of time. For example, the borrower may know that he or she will be transferred to another location in three years, and will likely sell the home and pay off the loan anyway. Since balloon loans usually have shorter terms (usually five to seven years) than a typical fifteen or thirty-year loan, the interest rate is often more favorable than that on a fifteen or thirty-year loan. A balloon mortgage usually offers many of the features of a fixed-rate loan, such as a conversion option to a longer-term loan in the event that your plans change unexpectedly. A balloon mortgage may be a fairly attractive financing vehicle if you are comfortable with the lump-sum payment that will be due at the end of the term. Still, there are many options and features that you should fully understand before selecting this type of program. Please talk to a mortgage professional before selecting any of these special programs.