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. In this guide, we'll explain everything you need to know about each of these steps.
1. Determine your budget. One of the first steps in the mortgage loan application process actually begins before you ever submit your application. Because first, you'll need to figure out your budget – including your down payment amount and how much home you can afford.
Steps in the mortgage origination process include getting preapproval, applying for the loan, waiting for loan processing and underwriting and attending closing day. Many lenders charge a fee for originating a mortgage, which typically costs between 0.5 percent and 1 percent of the loan amount.
How long does it take to get final approval after conditional approval? The good news is that once your loan has been conditionally approved, you're basically in the home stretch. That being said, your lender will likely need another 1–2 weeks to finalize your home loan and move forward with your closing date.
As the name suggests, the final stage of the mortgage application process is completion. Once you've exchanged contracts, your solicitor will organise the completion date with the seller's solicitor. As this needs to be coordinated with the other people in the chain, it can be hard to speed up this part of the process.
When it comes to how long does it take to get a mortgage approval, it can typically take 2-4 weeks after submitting your mortgage application to getting a mortgage offer. But it can take longer, for example if issues are thrown up in the mortgage valuation. Read more in our guide on Mortgage valuations explained.
Credit, Capacity, Capitol, and Collaterals are the four important Cs in the mortgage world and the most looked-at factors by banks when it comes to loan approval. So, what do each of the 4Cs mean, and why are they so important?
How do you know when your mortgage loan is approved? Typically, your loan officer will call or email you once your loan is approved. Sometimes, your loan processor will pass along the good news.
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!
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.
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.
A mortgage processor sets borrowers up with the proper documents for the loan program they want to use. They guide borrowers through the first step of loan processing. Once the paperwork is finalized, the mortgage processor then passes the loan files through to the underwriter.
In general, the mortgage loan process involves Application Acceptance, Offer for Property, Loan Application, Loan Processing, Underwriting of the Loan, and Release of the Loan Amount, or Closing. There"s more to it, and we"ll get to that in a minute.
How long does a mortgage application take? A mortgage application typically takes two to four weeks to process. Factors such as the how busy the lender is, how straightforward your circ*mstances are and how quickly you respond to any requests can influence how long it takes for a mortgage to be approved.
Introduction: My name is Dan Stracke, I am a homely, gleaming, glamorous, inquisitive, homely, gorgeous, light person who loves writing and wants to share my knowledge and understanding with you.
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