The mortgage loan process can be “scary” even if you have done it before and more so if this is your first time. Relax and don’t stress out - we, your REALTORS® at Horizon Properties, will help you every step of the way with all five of these steps. We have listed them here just so you understand what is required of you and how you need to prepare. After all, the more knowledgeable you become the more comfortable and in control you'll feel as we go through them.
1. Organize Your Documents
In order to obtain a mortgage, your lender will require certain documentation from you to make sure that you will have the ability to repay the loan you take out. Such documentation includes proof of employment, credit history, tax returns, pay stubs, bank statements, divorce and child support statements if applicable, and any other information that the lending company feels might be necessary.
Before we even start looking at homes, we want to get you qualified. Getting qualified will help you establish how much you can borrow. When purchasing a home, there are two options one may choose from to qualify for a loan. The first option, pre-qualification, is a quick process that usually happens in a matter of minutes. While pre-qualification is helpful, your other option – pre-approval – is more beneficial and gives you better leverage when negotiating with the seller. Getting pre-approved also lets you focus on homes within your price range instead of wasting time looking at homes that you won’t be able to afford. Finally, when it comes time to close, the process will go rather quickly since your loan has already been approved.
3. Find the Right Loan Program
While searching for the right loan program, there are many things to take into consideration. For example, you might want to think about how long you plan on keeping the loan. The length of your residence will determine the type of loan you want to get (i.e. adjustable or fixed). To figure out which loan program is the best, we will help you to compare different programs and everything that each one involves such as rates, fees and points. The whole process can be tedious and difficult at times, which is why a qualified loan officer can help us make the right decision.
4. Obtain Loan Approval
The process of obtaining loan approval involves the following steps:
- Review of loan application.
- Verification of credit history, employment history, assets such as bank accounts and mutual funds, property value and any additional information that the lender might require.
There are also a few things that very IMPORTANT that you must do to improve your chances of getting the loan approved.
- For any requests of additional documents and information, respond promptly.
- Do not make any major purchases such as a car or new furniture until the loan is closed. Increasing your debt can have the opposite affect on your application.
- Do not make any major moves such as changing jobs; transferring money accounts; selling any large assets or anything that could change your financial picture without checking with us, your REALTOR® at Horizon Properties and/or the Loan Officer.
- Make sure you will be in town for the closing date. If you cannot be there for the closing of the loan, we need to know enough ahead of time to have the escrow agent draw up a “special power of attorney” to authorize someone to sign on your behalf.
5. Close the Loan
Once the loan is approved, our next step will be for you to sign the final loan documents, which usually takes place at the bank or escrow company in the presence of a notary public. We must be sure to verify the information within the document, especially the interest rate and loan terms. Also to check and see if your name and address are correct. Finally, you will need to bring a cashier’s check for your down payment and closing costs. Shortly thereafter, you will be a HOMEOWNER!!! Congratulations – you did it!