What it takes to get you the best home loan. Learn the stages we go through to obtain your mortgage. Understand the main requirements for each step. Discover the documents needed in each stage.
Every purchase starts with an application. We need you to provide us with all the information we need to make a list of loan programs and payment options that best suit your condition. Our application process will usually take just a few minutes.
Normally, we collect basic information like your full name, phone number, and email so we can stay in touch and communicate during the process. We also need to collect other details that will help us determine which mortgage program fits all your needs.
Personal information.
When you work with us, you'll have a dedicated loan officer or mortgage broker who will provide options that fit your situation. Your mortgage broker is going to guide you throughout the whole loan process, work to help you select the best deal, and answer any questions you have.
You will be provided with a pre-qualification letter, which is a document that will allow your realtor to evaluate and compare properties that best suit your loan and home requirements and needs. This letter is going to contain our company information, the mortgage loan amount approved, the borrower's name, the program approved, and other details. You give the letter to your realtor and the loan process continues.
Pre-qualification letter.
Your realtor will help you find the right property for the loan amount approved. They will also consider your home requirements and needs, like property area, the number of bedrooms, neighborhood options, and more.
Once you choose the home, your realtor will advise you and help you make offers to the seller, and negotiate a purchase price.
When both parties reach an agreement on the terms, your real estate agent will forward a copy of the sales contract to us so we can have every detail ready for you by your closing date.
Sales contract.
Once we have your sales contract we start processing it to establish a loan estimate and work up the required disclosures for you to fully review. If you agree with all the statements, you permit us to proceed. After that, your loan will be set up and processed as we create the necessary documentation and work to get everything in place to make you a homeowner.
Disclosures.
Most mortgage loans require that a third-party appraiser review the property to make sure you're paying for its real worth. The appraiser assigned to your case will evaluate your property, taking into account a set of standards. Afterward, they will send a report back to us for review. We usually work with the appraiser assigned by the bank for this part of the loan process.
Appraisal evaluation.
As soon as your appraisal is complete, an insurance agent or underwriter will look at all aspects of the mortgage loan, like the contract, supporting documentation you provided, the appraisal party, and other important details. When the underwriter is satisfied with all the information reviewed, your mortgage loan is moved to a "Clear to Close" status.
Sales contract.
After the insurance agent issues the final approval, we will give you a Closing Disclosure to fully review. At the same time, we will prepare your mortgage loan documentation for the title company. We'll also provide you with the exact amount required to close and instructions on how to make that payment.
On closing day, all the documents will be ready for you, you will sign all the paperwork needed and get keys to your new home!
There are a lot of key factors that mortgage lenders consider when you apply for a mortgage. These can include your credit score, income and job history, assets, debt-to-income ratio, and even the type of property you're looking to buy. All of these factors are used as indicators of your ability to repay the loan you owe.
Mortgage lenders don't look at specific amounts when considering your income for a mortgage application. What they do want to know is if you have a steady cash flow to repay your loan. They will look into your monthly household income, employment history, and other forms of funds you have coming in such as alimony payments and child support.
Your credit score is a major factor that lenders consider when you get a mortgage. A high score signifies that you make your monthly payments on time and you don't have a bad credit history. On the other hand, a low score might mean that you are a risky borrower and have a history of mishandling your money.
Typically, conventional loans require a minimum credit score of 620. While loans guaranteed by the government usually need a score of at least 580 depending on the loan program you choose.
With a higher credit rate, you can get access to lower interest rates and better lender options. So it might be a good idea to improve your credit rating before you apply for a loan.
Just like your credit score and income stability, your debt-to-income ratio is also a factor used by lenders to know if you have enough cash flow to qualify for a mortgage loan.
To calculate your DTI, you need to take all your minimum monthly debt payments and divide them by your gross monthly income. The debts that are included in your DTI are recurring debts such as student loans, auto loans, and credit card statements.
The required DTI lenders are looking for will depend on what type of mortgage you're applying for. For example, a conventional loan will often require a DTI of 50% or less. While a USDA loan will require a DTI of 41%.
Other than the typical earnest money deposits, down payment, and closing costs, you also want to have some extra funds in your bank when applying for a loan. The mortgage lender would want to ensure that you'll still be able to make your monthly mortgage payments if ever you experience financial difficulties. To do this, they would look at any assets you might have. This can include your savings accounts, taxable investments, and retirement accounts.
The mortgage loan that you get, including the interest rate and homebuyer requirements needed, might be affected by the type of property you're planning to purchase. This is because property type can alter the level of risk for your mortgage lender.
If you're planning to get a small single-family home to use as a primary residence, you'll notice that you are more likely to get better terms than when getting an investment property. Mortgage lenders are more hopeful that you'll stay up-to-date with your payments because primary housing costs are already factored into most people's budgets.
Whereas with investment properties, homeowners are likely to put it behind primary residences if ever financial problems occur. To offset the potential risks, mortgage lenders will often require a higher credit rating and a larger down payment to qualify for an investment property loan.
To speed up your mortgage process, it can be helpful to get all your paperwork ready beforehand. Here are some of the documents that mortgage lenders often require when you apply for a mortgage.
First off, you need proof that you'll be able to repay your mortgage. To do this, your lender will ask you to provide documents to verify your income. These documents might include:
Your mortgage lender will also ask for income and asset documentation. This can include the following:
Providing your lender with these documents will help make your mortgage process a lot easier. So make sure to cooperate whenever they ask you to provide supplemental information about your financial situation.
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