What happens during the subscription process?

When a mortgage application enters the underwriting process, the information provided by the applicant is confirmed. In addition to the basic information provided in the application, an insurer collects official documents relating to the applicant's credit history, personal identification, and income. After candidate information is collected and verified, an analysis is performed.

The subscription process starts with gathering information. This phase begins when the applicant submits the initial application for a mortgage. Lenders will often ask for personal information about identity, residential history, employment status, income, outstanding debts, and financial investments. They can request copies of government-issued identification, request a credit report, request copies of filed tax returns, and copies of bank statements and paychecks.

As the subscription process enters the second stage, all information undergoes official verification. Some of them can be verified electronically through computerized database systems or the information can be manually verified by the subscriber himself. Outstanding debt balances and payment histories can be verified over the phone with creditors. Credit reports will likely be scrutinized for any indication of financial instability.

Once the information on the application has been confirmed, the lender will request an appraisal of the property. This step of the underwriting process involves both the creditor and the debtor. A home inspection is also required and is usually initiated by the loan applicant. The appraisal is to assure lenders that they are not borrowing more money than the home's current market value, while the inspection ensures that the home and its key systems are in good condition.

If, for whatever reason, the home is worth less than the agreed selling price, the seller may need to reduce the price in order for the buyer to get approval from the lender. Modifications to the sales contract must take place between the buyer and the seller's real estate agents before the underwriting process can proceed. If the inspection shows items that deviate from the home's value, such as roof leaks, these items may also need to be fixed before the loan is approved.

The last step that insurers take is the analysis of policyholder information. Underwriters must determine whether extending the loan makes financial sense from the lender's point of view. A debt/income analysis can be performed, in addition to determining the percentage of the applicant's gross monthly income that will be required to pay the loan. If extending the loan makes sense for the lender, they will recommend approving the mortgage application.

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