You have searched, viewed, and negotiated for a new place, and you have finally found your dream home. Congratulations! Now it’s time to start navigating the mortgage loan process. First off, you’ll want to think about which type of home loan might work best for you. Whether you are a first-time homebuyer or someone who has been through the mortgage loan process before and already knows the basics of buying a house, it helps to familiarize yourself each time you buy. Here are a few of the most important stages of the mortgage loan process:
Choosing A Program And Rate
Before you decide which type of loan is best for your individual financial situation, think about how long you anticipate staying in the new home. If you plan to stay for a long time, a fixed loan might be more appropriate. Reach out to mortgage professionals who can help you evaluate your unique situation and recommend the best mortgage options for you.
Each lender has its own loan application process, but there are typically a few similarities. Among other things, your potential mortgage lender will ask you to provide:
- Sources of income
- Pay stubs
- Social Security Numbers
- Authorization for the lender to check your credit
- Address of the new home
- Purchase contract
- Banking information
- The amount you wish to borrow
Get A Loan Estimate
Your lender will review your application and determine if you qualify, then the lender will offer an estimated interest rate, monthly payment, and closing costs for the loan. The estimate should also include estimated tax, insurance costs, and, if it’s an adjustable mortgage, how the mortgage interest rate may change in the future. The loan estimate does not say whether you are approved or denied; it only presents the offer a lender may be willing to make. Ideally, the loan estimate should help you compare multiple loan offers.
Choose Your Mortgage
After reviewing your options from multiple lenders, carefully consider the details of each. Ask the lenders any and every question you might have. Once you have made a choice, notify the lender about your decision to keep the ball rolling.
After the mortgage company looks at all of your documentation, they may approve your loan. From there, they should offer what is called a Closing Disclosure. This is a document that provides details about the loan you chose. Not unlike the loan estimate, it describes your monthly payments and other fees you must know about, such as closing costs and fees. You should receive this closing disclosure at least three days before closing on the home so that you have the chance to compare it to the estimate, and to ask the lender any of your remaining questions.
After the loan is approved and you accept the terms, your broker and the closing attorney are notified to verify the closing fees. Some states require the presence of a closing attorney during the closing process. If there is a closing attorney, he or she will schedule a time for you to sign the loan documentation. Check with your lender to make sure you know what to bring to the closing.
Enjoy Your New Home
You did it! After signing at closing, you should receive the keys to your new home. From there, your loan will have been processed and the property is all yours.