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For many homebuyers, the period of time between the submission of the loan application and receipt of the lenderís commitment letter is one of uncertainty and concern. However, if you understand the process, waiting for approval will be far less worrisome.

After your loan application has been completed, your lender will begin the work of verifying all the information youíve provided. This process can take anywhere from one to six weeks, depending on the type of mortgage you choose, whether you are buying a home outside your local community, and other factors. Your loan officer should be able to give you an idea of the processing time for your application.

Within three business days after completing the application, the lender must give you an estimate of your closing costs. It will show costs associated with the loan settlement, such as origination fees, mortgage insurance, title insurance, escrow reserves and hazard insurance.

Youíll also get a statement that shows, among other things, your estimated monthly payment. The total cost of all finance charges on your loan is also shown, stated as an Annual Percentage Rate (APR). The APR represents the dollar amount of finance charges you pay either up front or over the life of the loan, converted to an annual interest rate.

During this "waiting" period, it is important to keep the lines of communication open. You should be accessible if the lender needs additional information or documents during processing. Quick response to lender requests helps keep the process on schedule.

After the lender approves the loan, you will usually receive a commitment letter which sets out the terms of the loan and the length of time for which those terms are offered. You usually must accept the commitment by returning a signed copy to the lender within five to 10 days. The commitment may contain conditions that you will still have to satisfy, so you should read it carefully.

If the lender decides not to approve your loan application, the lender has 30 days from the acceptance of your completed application to notify you. This notification must also include the reasons for rejection.

Once the commitment letter or approval has been received, you are assured the financing you need to complete the purchase of your home and you need to turn your attention to completing the details required for settlement.




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