Mortgage 101

Getting Started

You’ve finally made the decision to buy a home. Now what? The first – and most important – step in the home buying process is financing because you can’t do anything until you know how much you can afford. To get started, you need to understand what types of real estate home loans are out there and what lenders are looking for from a borrower. There are three main factors that help determine if you qualify for home financing: income, assets, and credit history.

Income
Most loan programs require the lender to verify all of your income sources. Typically you will need to provide paystubs, your W-2, and copies of your tax returns.

Assets
A critical step in the mortgage loan application process is to verify the sources for your down payment, closing costs, and assets, as well as documenting income and debts.

Credit History
All lenders review a borrower’s credit history to determine the type of credit used, the amount owed, and the borrower’s history of repaying debt.

The Home Loan Process
Applying For A Loan
This is when your lender takes your application and reviews your credit history. He or she will also discuss your short- and long-term goals and reasons for wanting to become a homeowner. This information is very helpful when evaluating which loan fits your needs best.

Choosing The Best Loan
With so many loan programs to choose from, it can be difficult deciding which loan is best for your individual situation. During the application process, your lender will walk you through all the options in order to match your needs with the best loan program.

Locking Your Loan Rate
If you have a Purchase and Sale Agreement, you can lock-in your interest rate. In most instances, you have the choice to either lock your loan at a set rate and fee for up to 30, 45, or 60 days, depending on the lock-in period you've selected, or you can let the loan float. Your lender can help you with this decision, but the ultimate choice is left up to the individual borrower.

Processing Your Loan
Once you have completed and signed your loan application, your lender will work with you each step of the way to get your loan approved and closed in a timely manner. After you have provided the necessary financial information, your lender will arrange for an independent appraisal and preliminary title report.

Underwriting
In many cases, loan approval can be completed at the time of application. For certain loan programs, your loan file is sent to an underwriter for review. Your underwriter may request more specific details about the property or your financial information before approving a loan.

Preparation For Closing
After your loan package is complete, the file is prepared for closing and sent to your closing agent.

Signing
Your closing agent will call you to set up an appointment to sign the final papers. At that time, you will be asked to bring a certified check for the closing costs and down payment. After you sign, the closer will prepare the final loan papers so that they can be legally recorded.