Find helpful tips and information for your mortgage process

Applying for a mortgage loan is on the top of the to-do list when buying a home. It is also one of the most important steps that will set the path to home-owning. Before you begin your home searching journey, there are some things you should discover first. With these step-by-step processes, learn about what loan you can get and should get:

1. Discover the amount you can borrow

Before you look at homes or even consider a loan, you should first discover your borrowing power. Knowing how much you can borrow will give you insight into how to proceed with the loan process.

A lender will determine your home loan qualification by looking at your monthly gross income compared to your monthly expenses. These expenses can include property taxes, PMI, association dues, insurance, and credit card payments. Once a lender determines how much you qualify for, you can start looking at loan plans.

This is also a good time to apply for pre-approval if that is the road you want to take. In either case, knowing how much you can afford will help you find a home in your budget and the right loan for you.

2. Choose wisely on a loan plan

In a pool of home loans, there are several different types to choose from. Deciding which one fits best with your circumstances is important. Be sure to have a mortgage professional with you to ensure you pick the best option for you. Your choice should take into account your financial situation and goals. To help you understand each loan type, here are key details on the two most common loans:

Fixed-rate Mortgage

Different from an ARM, a fixed-rate mortgage has the same interest rate throughout the entire payment of the loan. FRM may be right for you if you:

  • Plan to live in your home for over 7 years
  • Like stability in interest rates
  • Not comfortable with a higher payment should your interest rate go up
  • Anticipate having the same income and spending

Adjustable-Rate Mortgage

With an adjustable-rate mortgage or ARM, the interest rate applied to the mortgage loan will fluctuate as you continue to pay off the loan. ARM may be right for you if you:

  • Plan to live in your home under 5 years
  • Aren’t bothered by varying interest rates
  • Comfortable with a higher payment should your interest rate go up
  • Anticipate an increase in income in the future

3. Apply!

4. Be ready for the approval process

The approval process begins almost immediately after the application is submitted. In this process, your information will be verified and evaluated. A lender will check many things to include your income, employment, credit, and assets. Your income and employment will help determine your ability to pay for the monthly payments on the home. Your credit is used to determine how well you pay off debt on time and in full. Having a mortgage means owing money and your credit will help the lender determine your risk as a borrower. A lender will also evaluate your assets to determine your ability to pay for a down payment.

The approval process also involves getting an appraisal of the home to determine the property’s value. As the process unfolds, additional documentation might be requested. All of these factors that go into the approval process may be overwhelming. To help mitigate the stress, be sure to follow these practices:

  • Fill out your application completely from the start
  • Respond as soon as possible to requests
  • Avoid moving money into or out of your bank account unless you have a paper trail
  • Avoid large, costly purchases until the loan is closed
  • Stay in town when it’s close to your loan closing date

5. Close on the loan

Once you are approved for the loan, the next step is to sign any final documents and make any final payments. Here is a list of what to bring to the closing:

  • Cashier’s check (personal checks most likely won’t be accepted)
  • Proof of homeowners insurance and any other insurance that is requested
  • Forms of identification

When you go to close on the loan, first read over the paperwork to confirm the information is correct. Check for the correct interest rate and terms promised as well as your personal information-name, address, contact information, etc. Signing happens in front of a notary unless stated otherwise. During this process, you will pay the down payment as well as any additional required closing costs.

How We Can Help:

The process of getting a loan can be stressful, but it doesn’t have to be. Dee Ayers is an experienced mortgage broker who can walk you through every step. Dee can help you find the right loan for your circumstances and help improve your chances of getting approval. Contact Dee today to partner with an experienced professional that wants to help.

Content presented here is for informational purposes only. Every situation is different and you should consult with a mortgage professional before making any financial decisions. We will be happy to schedule a consultation to discuss your specific situation and needs.

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