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While finding a new home can be exciting, navigating the mortgage process can be overwhelming for some. Knowing what steps you need to take can help the process go more smoothly. Once you have an accepted offer, here’s what you need to know to make sure your mortgage application stays on track:
you should estimate how much house you can afford. This lets you set realistic expectations for house hunting and choosing a mortgage loan. Instead of seeking your maximum home purchase price, though, it may be better to determine the monthly payment you can reasonably manage.
For a list of housing counseling agencies approved by the U.S. Department of Housing and Urban Development, call 800-569-4287 or visit:
Pre-qualification occurs before the loan process actually begins. The lender gathers information about your income and debts, and makes a financial determination about how much house you may be able to afford.
It's a good idea to know how expensive a home you can afford before you start shopping for one! If you are refinancing the loan on your existing home, then the pre- qualification process should help you decide whether refinancing is a good idea for you.
Now that you’ve been pre-approved, it’s time for the fun part — house hunting.
After visiting properties with your agent and picking out the home you want, it’s time to make an offer. Your real estate agent will know the ins and outs of how to structure the offer. It may include contingencies (or conditions) that must be satisfied before the deal is complete.
When you make your offer, you’ll generally also submit your earnest money deposit.
The earnest money is a cash deposit made to secure your offer on the house and show you’re serious about buying.
Speak with your real estate agent ahead of time about how large the earnest money deposit is likely to be, and be ready to write a check when you make an offer.
application. Now that you’ve found the home you want to buy and a Mortgage Broker to work with, the mortgage process begins. At this stage, your loan officer will have you fill out a full application and ask you to supply documentation relating to your income, debts and assets.
The Loan Officer (LO) reviews the credit reports and documentation to verify your employment, debts, and payment histories. If there are unacceptable late payments, collections, judgments, etc., the LO requests a written explanation from you. The LO also reviews the appraisal and survey and checks for property issues that may affect final loan approval. The LO’s job is to put together an entire application package for the lender's underwriter and submit the loan application along with the supporting documents to the lender.
The lender's underwriter is responsible for determining whether the application package prepared by the LO meets all the lender's criteria. If more information is needed, the loan is put into "suspense" and you will be contacted to supply more documentation.
If the underwriter approves the loan, the lender issues a conditional commitment to lend, orders title insurance, works with you to clear all conditions to its commitment to lend, and then schedules a closing time. Conditions to the lender's commitment may include issues with credit, income, or the property that may arise during the processing and underwriting process.
The closing will occur after all conditions are cleared and the lender issues a full loan approval. At the closing, the lender "funds" the loan with a cashier's check, draft or wire to the closing agent, who disburses funds, in exchange for the title transfer to the property. This is the point at which you finish the loan process and actually buy the house, subject to the lender's loan.
