The Homebuyer Guide to Getting a Mortgage
The road to acquiring a home can be a tedious one, made so by a lack of understanding on how to get a mortgage. To assist on this journey, find below our Homebuyer Guide to Getting a Mortgage.
Affordability:
Before you start searching, get a dialed in grasp on your budget in order to avoid falling in love with a house that is not within you reach. You can use an online mortgage calculator to determine the range of purchase prices that your income can afford and then calculate what your monthly expenses are going to be.
Start the Mortgage Process
Once your price range is established, connect with a lender, who will assign a loan officer to you. The officer will require that you provide the following information, either verbally or online, before fully documenting it:
- Personal information- such as date and place of birth.
- Residence history for the last two years.
- Asset balances- give information on all accounts that you have, be it savings, checking or investment accounts.
- Employment and income- documentation for the last two years showing your employment history and income. Tax returns for the same period are required as well.
- Credit card payment and balances.
- Social security number- this is in order to get a credit report to confirm your credit scores as well as debts.
Select Down Payment and Preferred Loan Type
Now that the lender now has all your information, he is properly suited to advise on an appropriate down payment. Your income could be strong, but maybe your savings would be considerably lowered with a full 20% down; in this situation he could recommend a lower down payment of, say, 10% so as to leave you with cash for maintaining your home.
You may also think that you probably need a one-bedroom condo right now but plan to sell and upgrade in 5 years. However, based on the assessment, the lender might advise on a 3-bedroom house that can be paid for over 30 years. This could be based on your income and the possibility to start a family in the near future.
Shop Around for an Agent and a Home
You have started the mortgage process, now’s the time to get an agent within your area. Once you’ve found the right partner, introduce her to your lender so that she can be briefed on the process, the down payment that you can make and the price range. This will also show the agent the level of your seriousness to close on a deal as soon as the perfect home is found.
Make an Offer & Finalize Your Loan:
If a homebuyer has made it this far, then you are very close to sealing the deal. Once you find the perfect home, make your offer to the seller and have your agent present it to them. If the seller accepts the offer, the loan request moves to the final process: approval. The lender will recommend you to lock in your rate now that a seller has been found. At this point, the lender will request any updates on the information that you gave him previously and then order an appraisal of the property, while reviewing the title of the property to confirm ownership. Once all these checks have been given a clean bill, the lender will draft the loan documents, have you sign them and fund the purchase price. You will then officially be a home owner.