How to Apply for a Mortgage?
Having a home for your family is very important. If you can’t afford to buy a new home, having it through a mortgage is another option. This decision must not be in a hurry as you need to think about it well. It needs preparation and enough knowledge on the type, terms, and conditions of mortgage loan that you are applying for. If you join into this process without having proper data, it could slow you down and end up in poor decision-making. Closing a mortgage agreement normally takes about an average of 45 days.
IMPORTANT STEPS TO DO BEFORE YOU CAN APPLY FOR A MORTGAGE
1. You need to confirm that you have a good and strong credit score as well as your credit report is free from error.
2. Have enough understanding first and be firm on your decisions on what kind of mortgage you want.
3. Research and compare different lenders.
4. Get pre-approved for you to obtain at a given loan amount.
5. Assemble your mortgage loan paperwork.
6. Find the home you want.
APPLYING FOR A MORTGAGE?
These are the following steps on how to apply for a mortgage. This article will help you on what are the needed requirements, how to process, gives a detailed explanation, and what a lender normally does at each phase with an approximate time to attain each step.
PREPARE THE MORTGAGE APPLICATION FORM
Estimated Time: 45 to 60 minutes.
Now that you already had wide researched different lenders and have one or more pre-approvals for a possible mortgage, it is now time to select the best mortgage lenders. You can start by calling lenders, visiting their offices, talking to some agents for you to gather more information, and filling out their applications form. You can also ask help from their agent to fill out those forms while you are giving them your details by phone, through e-mail, or in person. Mortgage applications usually follow the standard format of uniform Residential Loan application form that consists of five pages of various questions relating to assets, debts, finances, work or employment, properties, and the loan. You have the option to submit multiple applications for you to compare which of them offers best and to your advantage. If you can afford to pay a home inspector, then it’s a good thing to have one to immediately assess the condition of your properties even if lenders do not require this.
THE LENDER
The lenders will ask permission in pulling your credit. After they will receive your application, based on the law, they are given three business days to provide you a Loan Estimate Form which is a detailed disclosure that shows the type of loan, amount, its interest rate, mortgage costs including mortgage insurance, hazard insurance, property tax, and closing costs.
REVIEWING YOUR LOAN ESTIMATES
Estimated Time: 1 hour up to several hours
You can use now your loan estimate form to compare mortgage costs and terms. You can compare the total costs or charges in five years, the percentage of principal you will have to pay in 5 years, its APR or annual percentage rate, and the amount of the loan that is being paid in interest.
CHOOSE THE BEST LENDER AND COMMIT
Estimated Time: 5 minutes
You can now assess the trustworthiness and responsiveness of those lenders. After choosing the best one, contact the lender you’ve chosen and inform them that you are ready to proceed with your application.
THE LENDER
Most of the lenders will ask for some money for a credit report which is estimated to be $12 for a sole report or it will cost $26 for a mutual report and an appraisal that cost $400 to $500.
LOAN PROCESSING TAKES OVER
Estimated Time: 2 to 3 weeks
All of the declaration you made on your application gets on under the microscope at this stage. Brace yourself with those documents requests and questions that they are going to ask. Responding promptly will keep everything moving forward.
WHAT DOES A LENDER DO?
If you said that you are self-employed and you can earn up to $65,000 annually, then their processor will pull on your tax record to confirm if you are saying the truth. If you said that you can make $50,000 annually, then their processor will look at your pay stubs and they will call the HR department of your company to verify.
UNDERWRITING
Estimated Time: 24 to 48 hours
All you need to do now is to wait and sit tight. If needed, you will produce more documents and answer more questions from them.
THE LENDER
The job of an underwriter is to assess the risk involved in lending you the money on this property. They need to have answers to questions like, what is your loan to value ratio? Is your cash flows enough in making monthly payments? What is your history of generating on-time payments? How about your credit character? Is the home being valued rightly? Is the home condition good and has a clear title? Is it located in a flood area?
YOUR MORTGAGE LOAN IS NOW CLEARED TO CLOSE
Estimated Time: 24 hrs. or less
This is the final step and the lender must function before borrowers can move forward. If the lender calls you and you will hear the good news from him that you are cleared to close, then he will send you a federally required form which is the Closing Disclosure. You must receive this form as they will send this form 3 business days before the scheduled closing period. It will show the details of your mortgage and its final costs.
FINAL THINGS TO DO
You must carefully evaluate the Closing Disclosure together with your loan estimate so you can discern if any of the numbers or quoted fees have changed. If there are some changes, you can ask the lender for him to explain and to give you the correct details. This is the final period to decide if you are sure to go ahead. If you do, then you are on to your closing. There’s one last piece of paperwork for you to sign and after that, you can now claim your new mortgage loan.