Do you know what to expect when applying for a mortgage? Here’s a quick breakdown of how to get a home loan.
Step 1: Get Your Pre-Approval Letter
Getting pre-approved should be your first priority as a prospective home buyer. If you start shopping for a home before you’re approved, there’s a chance you could be wasting your time.
A pre-approval letter is a conditional letter that will state how much loan you qualify for. Once you have this in hand, you can shop knowledgeably and confidently, knowing your exact qualified amount. Take care of this step first because without it sellers won’t see you as a serious buyer that is worth their attention.
To get pre-approved, you’ll meet with a Loan Officer to provide documentation of your income and any assets. This includes items like:
- Credit report
- Pay stubs
- Federal tax return
- Bank statements
The approval process doesn’t take long and you’ll likely hear back within a few days.
Step 2: Find Your Home
Once you have your pre-approval letter, that’s the green light to start working with a real estate agent. A good agent will not only help you identify the right home, but will help you structure the purchase offer and negotiate a solid purchase contract. Your real estate agent and loan officer will be your guides throughout the homebuying journey.
First time buying a home? Follow these tips for making an offer on a house for sale in Redding.
Step 3: Submit Your Application
Once you have a purchase contract in place, that’s the trigger for starting the mortgage application process. You should be in frequent contact with your loan officer, and at this time they will update the documentation of your approval with the actual address and any new information you’ve gathered. Together with your loan officer, you’ll complete and submit your full mortgage application.
Step 4: Submit to Processing and Underwriting
Next, your loan officer will submit your application for processing. The processor will order a title examination, an appraisal report, and any missing documentation. Once they receive the appraisal report, it’s standard procedure for the processor to also run a background check of all parties involved to avoid any fraud cases.
Once the processor is finished, the underwriter is responsible for reviewing the entire loan package and issuing an approval. This acts as a third set of eyes for reviewing the compliance details, ensuring that you’re in line with all regulations and guidelines as established by Fannie Mae and Freddie Mac.
Step 5: Get Cleared to Close
The underwriter will likely provide what is called “conditions to close”. These are requirements that the underwriter places on your loan application before giving the final stamp of approval. No worries, this is typical of mortgage applications. At this point the process becomes very specific to your personal circumstances.
Once you’ve met these conditions, get your favorite pen ready because soon you’ll be signing on the dotted line and officially closing on your home.
Step 6: Move into Your Home
You made it through all the paperwork and now get to enjoy your new home. Hire a moving company and get the champagne ready.