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Mortgage Cycle
(Video Script)
Introduction
Hello Learners, Welcome to the world of U.S. mortgages — we’re going to explore one of the most important parts of the US financial system — The Mortgage Process. A mortgage isn’t just a loan. It’s the key that helps millions of people achieve the dream of owning their own home. Mortgage is the bridge between families and their future homes. Behind every mortgage is a network of lenders, borrowers, investors, and regulators working together to keep the housing market moving. In this training, we’ll explore how this trillion-dollar industry works, step by step — from application to closing, and beyond. Let’s begin our journey into the U.S. mortgage industry."
Will understand first the key players in the mortgage process,
The borrower- a person, who want to purchase the property,
The seller/broker- who can sell or guide for property purchase,
The lender or bank -who gives the finance to purchase the property,
The Secondary Market -
Where we can get the property?
Borrower can purchase property through 1) Lender i.e REO properties,
2) From Seller or broker or 3) From Foreclosure sell
Main Overview
Once the borrower decides the property to purchase, he makes a sale/purchase contract with the seller. It is called as deed. Then he goes to the bank or lender for the finance for that property. He keeps the Deed as a mortgage to the lender or bank and the lender or bank will transfer the money to the seller’s account after checking the barrower’s all creditworthiness. Here the purchase transaction between seller and borrower get ends. The seller gets all his money and he went out from the picture.
Here the Property title is transferred to the Borrower but it is shared with the lender under mortgage.
Now Borrower has to pay the full loan amount to the lender in form of Instalments, EMI, P&I (Principal & Interest). Once loan get paid in full, the borrower get full ownership of the property title i.e property.
Mortgage Cycle
Let’s see the whole process in detail with help of mortgage cycle.
1) Origination – It is 1st step where the Borrower reaches to the bank or lender for the finance solutions. He apply for the loan by filling the Loan Application Form called 10’O’3. (Document attached at end). The form is consist of 10 sections includes Borrower’s personal Info, Income, Assets, Real Estate Property owned etc. After receiving the 10’o’3 form from borrower, the lender provides Initial GFE and TIL docs to the borrower within 3 business days. The GFE Includes the loan terms, estimated cost, loan origination fees and other loan details. The TIL doc include the APR i.e. Annual Percentage Rate for loan, Finance Charges applicable to the loan, The Total amount financed, Total Payments need to make to the borrower. The borrower can compare with different lenders with help of these initial documents and finalize the lender to whom he can borrow the money.
2) Processing- after done with the origination stage the loan pass to the next stage of the cycle. In the processing phase the Title of the Property is get checked. The Title Company search regarding the property thoroughly. It finds any defect in the ownership, any prier loans on the property,