It’s time. You’re ready to move – out of your parent’s house, out of your tiny apartment, or even out of the house you’ve lived in for 20 years. Whether it’s your first house or you’re a seasoned homeowner, getting a new mortgage is a big decision and shouldn’t be done lightly. Researching your options and the steps is a good place to start.
First things first – you need a pre-approval. Take this step before you begin seriously looking at houses. It will benefit you greatly! Letters of pre-approval are provided by mortgage lenders – banks and mortgage companies – and will give you an accurate estimate of the amount of money you can spend on a home. This is good for multiple reasons: you will be able to look only at homes within your budget, it will prove to sellers that you are a serious buyer, and it can assist your real estate agent during negotiations with the seller’s agent. Additionally, because a pre-approval requires many of the same documents that a loan application does, you will have to provide less documentation during the application process.
Once you’ve decided on the home of your dreams, it’s time to put in an offer. This is where your real estate agent really shines. Your agent will work with the seller’s agent to make sure you put in a reasonable offer that works for both you and the seller. As soon as your offer is accepted, let your lender know so they can get started on getting your mortgage loan accepted.
If you’ve been keeping up with your lender during the home search process, you probably already have some idea of the loan product you will choose. There are dozens of options – conventional, USDA, FHA, VA, and more. Each loan has pros and cons, but it all depends on your credit score, your down payment, government requirements, and even the location of your new house. Your loan officer will be able to talk with you about your options so that you can both decide which loan product is right for you.
If you followed through on step one, step four will be a cinch. You may need to provide a few additional documents or signatures depending on the loan type you choose. Some government backed loans (like USDA, VA, and FHA) require some extra steps that aren’t necessary with a conventional loan. Once you have provided the documents required of you, your loan will go into the underwriting stage. This is where your documents and loan are reviewed for any errors or inconsistencies that need to be addressed before your loan is officially approved. This is also the step that will take the longest if you have not already been pre-approved. It can take anywhere from a few days to over a month, depending on issues that arise due to insufficient or incorrect documents.
Finally! Your loan application has been approved by your lender, and it’s time to go get your new house keys. The actual closing on your home is conducted by the title company and requires pages and pages of signatures from both you and the sellers. Depending on the lender you choose, you may be able to electronically sign many of these pages. A lender like Ruoff Mortgage, for example, has the Digital Closing Experience which leaves you with only a few minutes at the closing table instead of hours. Once the last document is signed, the keys are handed over and your new house is officially yours!
If you follow these five steps, your mortgage journey will be simple and painless!
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