Start your search for your perfect home by first starting your home mortgage loan process.
The mortgage loan process can seem to be overwhelming. Yet, if you go over the terminology and the paperwork that’s needed, you’ll get a better understanding and can walk through the process with confidence.
Search And Compare Lenders
To begin the process, you should search and compare lenders before you search for your new home. When you’ve found a lender that’s right for you, ask for a prequalification and then for a preapproval. Preapproval shows that underwriters have approved your financial ability to borrow a certain amount of money. This gives you a stronger negotiating position.
Applying For A Loan
The loan application will require substantial paperwork, employment verification and credit checks to measure your trustworthiness and resources to pay for the loan. Besides completing a loan application, your lender may ask for these financial and legal documents:
1. W2 Statements
2. Tax Returns
3. Pay Stub Statements
4. Bank Statements
5. Deposit Verifications
6. Rent Amount
7. Divorce Decree
8. Bankruptcy Documents
9. Total monthly Expenses
10. Total Debt
After The Loan Application
When you’ve turned in a completed application, within three days you’ll receive:
1. Good Faith Estimate – list of fees and closing costs
2. Truth-in-Lending Statement – loan costs and annual percentage rate
Loan Approval And Closing
A loan processor will check your application to see if it’s complete and correct and has the required paperwork. Then, an underwriter will take your financial information and verify that it meets these four qualifications:
1. Ability To Pay Loan – Income easily covers expenses and new mortgage payment.
2. Willingness To Pay – Credit score and credit history prove you’ll pay as agreed.
3. Cash Reserves – Confirms funds are available for down payment, closing costs, and two months payments.
4. Value Of New Home – Verifies that the property appraisal exceeds or matches the purchasing price.
Then, in two to four weeks, the closing for the loan will take place. After you review and sign the documents, you’ll become a new homeowner!
