There are so many people who do not understand the meaning of a loan origination system. When I was new to this concept, I came across a plethora of definitions for the same. Every lender I met had a completely different interpretation- how it started, when it started, various stages, and where and how it ends. Keeping in mind all the points of views, it is essential to take a holistic view of the entire procedure.
Regardless of the type of loan you want to opt for or whether your approval procedure is manual or automated, most of the lenders are absolutely proud of themselves especially when it comes to the loan origination. And why not? This is something that makes them stand out from others.
Now when we talk about the procedure and all the steps involved in it, you will get to learn so many things. Below we have mentioned various stages of the entire procedure. Give it a read and let us know if you want to know anything else regarding the same or terms like ABL Loan.
- Pre qualification: The very first step when it comes to loan origination procedure is pre-qualification. This is the stage when the borrower will get a list of items he/she needs to pull together in order to submit to the lender. This may consist of the mentioned below:
- The present employment information
- Total household income
- Payment history
- Statements of the bank
- Tax returns
If you submit all these documents and information to the lender, it is basically processed in the right manner and a loan pre-approved is made. This lets the borrower move further in the procedure to obtain a loan.
- The loan application: This is the stage where the borrower completes the loan application procedure. There are times when the application is completed, but at present the electronic version is submitted by the borrower. New methods and technologies let them complete the application online. In addition to this, the procedure can also take place through a mobile app.
- Application processing: Once the application is received by the credit department, the very first step that experts take is review the same so that it is accurate and complete. Everything required must be filled by the borrower in the right manner. If something goes wrong, there are high chances that the application will be rejected.
- Underwriting procedure: When an application is deemed in the right manner, the underwriting procedure is started. The application runs through a procedure of taking a plethora of components into account. Some of them are credit score, risk scores, and more. At times this procedure is completely automated, other times it is manual or a combination of both.
- Credit decision: Depending totally on the underwriting procedure, the file can be denied or approved or sent back to the originator for extra details.
- Quality control: There is no denying the fact that consumer lending is highly regulated. This is why the quality control stage in the procedure is vital especially for the lenders. Basically the application will be sent to the professionals where the final call and other essential variables will be examined by them. Basically this is the last look at the application before the funding process begins.
The Final Word
These are some of the factors you need to keep in mind when it comes to gathering information about the loan originator process. If you want to know more or have any questions about the same or los System, speak to the professionals without further ado. They are the ones who make use of the best Loan Origination Software while performing the procedure.