The Four Steps of the Loan Origination Process
Lenders offering mortgage loans have to engage in different processes, from loan approval to disbursal of funds. A lender cannot approve a mortgage loan request without analysis and has to ensure that the borrower will return the mortgage loan timely. If lenders start handing out mortgage loans blindly, they will be vulnerable to loan default. Lenders have to focus on the entire loan origination process for better results. Loan origination includes all mortgage loan approval processes, from loan application to disbursal. Some lenders also look for loan origination outsourcing for increased efficiency.
Read on to understand the four steps of the mortgage loan origination process:
Pre-approval of Mortgage Loans
Lenders do not always wait for the borrower to submit mortgage loan applications. They check the creditworthiness of individuals and send them pre-approved loan offers. Lenders send pre-approved loan offers to customers who have been in contact before. With a pre-approved loan offer, the customer will already know the maximum loan amount they can get from a particular lender. Since lenders have the
income and credit information of existing/past customers, they can analyse their loan repayment capacity. A pre-approved loan offer will save time for both the customers and the lender. A lot of research is required to find customers eligible for pre-approved mortgage loans.
Mortgage Loan Application
Someone searching for a mortgage loan has to apply with a lender. Usually, people submit multiple loan applications with different lenders and wait for approval. Loan experts suggest that submitting multiple mortgage loan applications might decrease the chances of approval. The first responsibility of the lender is to provide customers with a way to submit loan applications. Back in the day, most lenders asked borrowers to submit physical loan applications. Lenders now accept online mortgage loan applications from borrowers. Once the lender receives the mortgage loan applications, it’s their responsibility to process them.
Mortgage Loan Processing
It is the most crucial step in the mortgage loan origination process. Underwriters and loan processors have to analyse every mortgage loan application. It includes analysing the income, creditworthiness, repayment capacity, debt-to-income ratio, and many other factors for each borrower. If something seems fishy, loan processors
reject the particular mortgage loan application. Most banks search for Loan Origination Outsourcing services for loan processing only. With the help of an outsourcing partner, lenders can reduce the risk of default on mortgage loans.
Mortgage Loan Disbursal
It is the final step in the loan origination process for mortgage loan providers. Once the mortgage loan application is approved, the funds are transferred to the borrower. Usually, lenders transfer the mortgage loan funds into the borrower’s bank account.
Conclusion
The loan origination process is a big headache for lenders. They might not have expert loan processors to review mortgage loan applications. In such a case, a lender can trust the loan origination outsourcing services of Acuity Knowledge Partners. Outsourcing mortgage loan processes will reduce the burden on internal employees. Outsource the loan origination process to Acuity right away!
Must Read: Top 5 Loan Origination Outsourcing Companies