There are five basic steps for financing is provided by the lender. These are qualifying the borrowers, qualifying the property, approving and processing the loan, closing the loan and servicing the loan. The borrowers are asked to complete an application form. In the application form one must provide employment record, credit references, financial statements and so on. The loan officer can verify the provided information. Most lenders use chanter, capacity and collateral screening device to determine the qualifications of the borrowers. When the borrower fulfills the requirement then he is set by the lender.
Sometimes lender verifies the credit reports of the borrower. They also try to find out whether the borrower is honest or not. For giving the purchase loan the lenders need to know the ability to repay the debt. If one has a steady income it is easier to get the loan by him. The borrower cannot get the loan if he has too many debts at present. If a borrower is working in the second job the lender will also gather information from that source also. Sometimes they consider overtime information of the employees. Some lending institutions consider both spouses wages in computing the gross income of the borrower.
After verifying the applicant’s ability for the ability of monthly payments, he will try to know the down payment amount. If the loan amount is known by the lender he will easily calculate the principal, interest, taxes and insurance on the loan. When the loan is granted the lender has to rely on the security of the loan for investment safety.