Follow these eight steps to get a mortgage loan and become a new homeowner.
1. Figure Out What You Can Afford
Before you begin the mortgage process, it's important to assess your finances and make sure you’re ready to purchase a home. With a new monthly mortgage payment, it’s crucial to know if you can afford it, along with homeowners insurance, property taxes and the ongoing expenses of homeownership. Using a home affordability calculator is a great way to learn how much house you can afford. This tool can help you understand what home price is within reach.
Mortgage preapproval shows you how much a mortgage lender is willing to lend you. Mortgage lenders calculate this amount and your interest rate by assessing your income, credit history, credit report, assets and credit score. Keep in mind that preapproval will make you more attractive to home sellers and real estate agents. This is because you’re already vetted and ready for the mortgage loan process.
3. Find Your Dream Home And Put In An Offer
Now it’s time to start looking for your dream home. Look at any homes you think could be the right fit, and don’t be afraid to ask your real estate agent for help during the house hunt. Once you find the perfect home, you’ll need to put in an offer. You’ll also submit your earnest money deposit to secure the offer on the home.
Once your offer is accepted on a new home, you can move forward and choose a mortgage lender. It’s best practice to shop around with at least a couple of different lenders to find the best interest rates and fees for your specific loan.
Keep in mind – your interest rate depends on your mortgage application and the type of loan you’re applying for. For example: Department of Veterans Affairs (VA) loan mortgage rates are usually better than average conventional mortgage rates. Meanwhile, Federal Housing Administration (FHA) loans tend to have more competitive rates. It’s important to question mortgage lenders to understand what they’re offering.
5. Submit Your Mortgage Application
After you’ve selected a mortgage lender, it’s time to fill out a mortgage application. Once you’ve submitted all of the necessary documents to complete your application, you’ll get a Loan Estimate in a couple of days that will disclose the terms, rates and fees of your home loan.
6. Go Through Mortgage Underwriting
The underwriting process consists of your mortgage lender reviewing your application and verifying your income, assets, debt and property details. Once verification is complete, you’ll receive final approval on your loan application. For the borrower, action may be required at this step unless the lender has any specific questions or needs any additional documents.
7. Prepare Your Down Payment And Closing Costs
This is where down payments and closing costs come into play. You’ll need to have the down payment for the property, closing costs and proof of homeowners insurance. This information can be found in the Closing Disclosure, which you’ll receive after mortgage underwriting has been completed. You’ll provide the cash needed for your down payment, closing costs and any other fees at your closing meeting.
8. Close On Your New Home
The final step is to attend your closing day meeting and officially become a homeowner. At this closing meeting, you’ll sign all necessary documents and ask any remaining questions regarding the sale or the property itself. Typically, the closing attorney or title company conducts this meeting in person, but e-closings are also available. Once everything is signed and handed over, you’ll receive the keys to your property, and you’ll officially be able to move into your new home.
Most people go through six distinct stages when they are looking for a new mortgage: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing.
The typical journey of a loan from submission of documents to disbursem*nt goes through four stages: loan signing, loan funding, recording, and disbursem*nt.
It begins with assessing personal finances, researching lenders, and obtaining pre-approval. The application and approval stage involve completing paperwork, providing supporting documents, and undergoing evaluation. The closing stage finalises the Mortgage agreement and transfer of ownership.
Mortgages can get denied and real estate deals can fall apart — even after the buyer is pre-approved. If you're aware of the pitfalls, you'll reduce the chance it can happen to you!
It binds the information collected into 4 broad categories namely Character; Capacity; Capital and Conditions. These Cs have been extended to 5 by adding 'Collateral', or extended to 6 by adding 'Competition' to it (Reference: Credit Management and Debt Recovery by Bobby Rozario, Puru Grover).
They include the pre-qualification stage, application submission, application processing, underwriting process, disbursem*nt, secondary markets, and loan servicing. This is the first stage of the loan life cycle in banking. It sets the loan origination phase in motion by signifying the borrower's intentions.
Generally speaking, it usually takes two to six weeks to get a mortgage approved. The application process can be accelerated by going through a mortgage broker who can find you the best deals that suit your circ*mstances. A mortgage offer is usually valid for 6 months.
Loan has been funded. The final step on the loan process is now complete: Your loan has been funded! At this time, all documentation is complete and the funds for the loan have been disbursed to the seller (for purchase) or to the payoff of the prior loan (for refinance).
There are six distinct phases of the mortgage loan process: pre-approval, house shopping; mortgage application; loan processing; underwriting and closing. Here's what you need to know about each step.
Collecting and ensuring that financial information is in order is a loan processor's most important responsibility. This step includes confirming that the correct documents are present and contain the accurate information the underwriter needs to approve your loan request.
Once the underwriter is satisfied with your application, the appraisal and title search, your loan will be deemed clear to close and can move forward with closing on the property.
From application to approval and closing, getting a mortgage can take anywhere from 30 days to 60 days. However, some home purchases can take longer, depending on factors unique to the purchase transaction and the home loan processing time.
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