When you find a home you love, you’re probably ready to move in right away. Unless you’re a multimillionaire, you’ll probably need financing (aka, a mortgage) to purchase the house of your dreams. Though the mortgage process can appear daunting, below are some easy steps to a new mortgage that will help you obtain your dream home.
1. Seek preapproval
Preapproval from a lender is one of the best steps you can take to secure a mortgage. What are lenders looking for? In general, they want to see borrowers with a stable income and a low debt-to-income ratio. If you have significant debt, such as student loans or credit card debt, focus on paying it off before you set foot in a mortgage lender’s office. It will make the approval much easier by boosting your credit score and freeing up more of your income for house payments.
2. Complete a full mortgage application
Once you’ve been preapproved, you’re ready to complete your mortgage application. Before discussing the loan, you’ll sign a sales contract that outlines the terms of purchase for the home you have selected. You’ll then meet with a loan officer to get started on the loan approval process. The officer will inform you of any documentation you’ll need, go over any questions or outstanding issues, and provide you with good faith estimates of the terms of your loan package. An underwriter will assess whether you are eligible for the loan terms you have requested, and if so, you will receive an approval letter.
3. Closing on your home
Once you’re approved for a loan, you’ll have to meet all conditions of the loan within 30 days before the closing date. Your loan documents will then be sent to your settlement agent, who may be an attorney, escrow company or title company depending on your location. The agent will handle the closing process, including depositing your closing funds, running a preliminary title check, and settling all paperwork. Once the closing is completed, the keys are yours and your life as a homeowner has begun.
Though this process may seem complicated at first, you can obtain the home you want by taking certain easy steps to a new mortgage. This process can be made even simpler with the assistance of skilled mortgage professionals. Knowledge is key, and the best first step is to fully inform yourself about the loan approval process.