Getting A Mortgage For Your Next Home
Have you ever gotten a loan before? Not a personal loan, but a mortgage home loan. Although they are both loans, the process of getting a mortgage is very different than your average loan.
With three separate, but important stages of committing to a mortgage it can be easy to get confused without reviewing your options, the process, requirements, and more. If you’re looking to purchase a house in the near future – read on so you can stay on top of this process and get the best deal you can.
How Can You Start Applying For Your Mortgage?
The first step in getting approved for your upcoming mortgage is to become aware of your options. There are several stages of applying for a mortgage, but you don’t have to wait to apply! Start your application today.
Easy Ways To Apply
Start Your Mortgage Journey
So you’ve checked your financial forecast, you have all your documents, and you’re ready to start looking for your next home. You can start the mortgage process before looking at home or your local NextHome Legends realtor will recommend you start the process before making any serious offers.
As you begin this journey it is important to understand some basic procedures of applying for a home loan. For example, pre-qualification is one of the beginning steps in the mortgage process, but it isn’t an official piece of evidence of your ability to pay for your new home. Be prepared as you hunt for your next ‘home sweet home’ by learning more about the mortgage application process.
Step One – Pre-Qualification & Pre-Approval
Getting pre-qualified starts the loan process and is determined by a loan officer after a brief over-the-phone interview. You don’t need to provide any documents and it only takes 1-3 days to return a pre-qualification letter to you, but the accuracy of what mortgage amount you may be qualified for is based on the information you’ve given the loan officer.
It is always better to start gathering the documents you need before or during the pre-qualification period. When you find the right home and it’s at a perfect price – you won’t want to wait for a delayed mortgage application and the seller won’t either.
Getting pre-approved for a mortgage is an official and accurate determination of your ability and willingness to pay for a home. In today’s market, it’s best to have your pre-approval in hand when starting to meet with a realtor. This shows you’re eager to find your perfect home and you have the means to do so.
Your lender will be able to pinpoint a loan amount for you, which gives your realtor the information they need to show you houses in your price range.
Step Two: Start Your Home Search
Now that you have begun the process of having financial backing from the bank, it is time to start looking for your home. In today’s society, it isn’t uncommon for someone to start their search on the internet with websites like Zillow, Trulia, Realtor.com, and more. Although these websites can be helpful when first starting your search for houses – they also shouldn’t be the only tool in your home buyer’s toolbelt.
This is where your realtor comes in as an effective and resourceful tool that is working on your behalf. Realtors always have the most up-to-date information on the latest listings and even on homes that are coming onto the market in the future. Realtors can also help you navigate the home buying process and negotiate for you and your family to get the best price on a home you love.
When you find the home you want, your next step is to put an offer in on the house. When your realtor submits the offer it will often have contingencies. Contingencies are important because it protects you and your earnest money (money that is applied to your down payment at closing to reassure the seller of your purchase). Common contingencies include:
– Appraisals must come in close to the loan amount, not lower
– Home inspections do not find major issues with the property
– Borrowers obtain funding (final loan approval)
If both parties, the seller and you, agree to the terms of the agreement then a purchase agreement is signed by both parties. This agreement is binding and is the final step before putting in your mortgage application.
Step Three: Apply For Your Mortgage
Some documents are required in order to have your loan taken through underwriting. Some will have already been given to the bank through some of the prior documents you used for the pre-approval (e.g. employer’s address, gross income, etc), and others will have to be provided based on your specific loan requirements.
At this stage of the home loan process, you will need to provide supporting documents for Employment, Income, Assets, Debts, Property Information (the home you want to buy), Financial Blemishes, Mortgage Type, and Specialty Documents (if you’re applying for a specific mortgage). These documents are then compiled to produce a Loan Estimate.
A Loan Estimate breaks down the total costs and all of the terms of your loan. You are neither approved or denied at this point in the process so it’s important to stay on top of the process and be prepared when you are applying for a mortgage.
Step Four: Processing & Underwriting
Once you have submitted your application and all the documentation required – it will make its way through the chain of loan processing and underwriting. Loan processors request and order the information needed for the underwriter to review. Information requested by the loan processor includes property appraisal, document verification, property inspection (if required), title search, and anything else that wasn’t verified in pre-approval.
After packaging all of that information, they send the loan file to the underwriter. The underwriter is who reviews your home loan application and gives the decision on your approval or denial for a home loan. They can also give approval with conditions (e.g. explanation for late payments or collections).
If your application is approved you will still have some final tasks before you get the keys to your new home.
Step Five: Prepare For Closing
Once you’ve been approved for your home loan, you, your realtor, and your loan officer will have some work to do.
Sometime after your loan has been approved, but before you close on your home – you’ll lock in your interest rate. Interest rates fluctuate daily so it is important to listen to your loan officer about when the best time will be to lock it in.
The final stage before closing is Pre-Closing. This is where your lender, your realtor, and you ensure that all the final boxes are checked, contingencies are met, and the title insurance is ordered. Once all conditions are met, your closing meeting will be scheduled.
Step Six: Finalize Your Mortgage Home Loan
Loan documents that package everything together are printed out and sent to the title company (or an attorney’s office) where you will eventually have your closing meeting. During that time you’ll receive a Closing Disclosure that tells you how much everything is going to really cost (the final numbers), similar to the Loan Estimate you received before. Once you have the Closing Disclosure you have three days to review it before closing. This allows you to change the APR, the type of loan, and add a pre-payment penalty if required.
Prior to Closing, you have the right to walk through the property within a 24 hr period. This allows you to double check the contingencies are completed (if there were any) and that the seller has removed their belongings.
The Closing Meeting is the biggest part of purchasing a home! This is where you will sign a ton of documents and finalize the deal between you and the seller and lender. Make sure you bring two forms of ID with you and a checkbook for any small differences you may have to cover.
Find The Perfect Lender To Help Your Family
Here at NextHome Legends – we follow a specific motto, “Family, community, and collaboration for a better today and tomorrow”. This means helping make your family’s lives better, especially when you’re looking to buy your home.
We often recommend the follow lenders to our client’s due to their professionalism, undeniable skill and powerful results. If you have any questions about starting the mortgage process – contact one of them below and let them know we sent you!