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Tuesday, September 01, 2020

Step By Step Guide for Applying for a Mortgage

Applying for your first mortgage is an exciting life milestone. But the excitement can quickly turn to stress if you don’t know what you’re doing. An easy step-by-step guide will help you understand the mortgage application process. Here’s what to do with your mortgage application.

home loan interview
Interviewing mortgage lenders for a first-time mortgage

Choose Your Lender

Before you make an application, interview several mortgage lenders about the loan products they have. Each bank actually can have different loans that they can sell and originate, plus they may have different flexibility on their loan terms. It could save you thousands, in the long run, to interview and narrow down your lender and loan choices early.

Gather Your Paperwork

In the pre-approval phase, you were asked to submit some financial information. Keep this file up-to-date with bank statements, proof of debts and assets, and any income changes. You’ll need it for your loan application.

Submit Your Application

As you may have expected, after you’ve made an offer on a home, the first immediate next step is to fill out loan applications. It’s good to check out at least three different lenders, so you have plenty of options when it comes to mortgage rates and loan terms. Filling out an application will slightly differ depending on the lender and your personal loan preferences. You might do this in person or online or ask your loan representative to do it for you.

The applications themselves are quite lengthy. You’ll be asked for detailed information about your financial situation, including debts and assets, and questions about your employment history. All this information must be backed by paperwork in the form of W2s, bank statements, loan statements, and other documents.

Of course, you must include the amount you’re asking for. Even though not every lender will require it, it’s a good idea to hire a home inspector at this stage to ensure there are no surprises with the house’s condition.

Review the Loan Estimate

Each mortgage lender you apply with will provide you with a mortgage estimate. They are required to do so within three business days of the completed application submission. Compare them to find the one that’s best for you, paying close attention to:

  • Estimated closing costs
  • Estimated monthly payment
  • Prepayment penalties
  • Annual percentage rate (APR)
  • Interest rate payments
  • Total cost in five years

Ask as many questions as needed before committing to your top choice.

Wait for the Loan to Be Processed

Now is the hard part: waiting. Your application will have to be processed, which means every claim you made, from your salary to your tax records, will be verified. Expect this to take two to three weeks. Unfortunately, you can’t sit back and relax during this time. The lender’s loan officers may ask you more questions. Be ready to provide any relevant documents if needed.

Help with Underwriting as Needed

Finally, you get a little break in the underwriting stage. While you may have to answer a few questions, this stage is mostly the underwriter’s responsibility as they assess the risk of lending you money. They will analyze the likelihood of you paying the money back on time and things relating to the house. For example, if your home is in a flood zone, this is essential information for the underwriter to assess. This usually takes just a day or two.

Get the Good News!

Last (and best!) is your mortgage being cleared to close. The ball is in your lender’s court to contact you and tell you the good news. The lender must provide a closing disclosure three business days before closing. Compare your closing disclosure to the loan estimate and ensure all the numbers are identical. Follow up with your lender if there are any discrepancies. Otherwise, the loan will be yours once you’ve finished the paperwork at the closing table!

Discover How Easy Mortgage Applications Can Be!

If you have more questions about applying for a mortgage, a local Mortgage Professional will gladly help you. They work with all kinds of first-time homebuyers who are navigating this confusing process and would be happy to put your mind at ease.
Updated March 2024

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Preston Guyton

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