How to Get a Home Mortgage
Almost everyone looking to buy a new home needs to first get approved for and receive a home loan. Your house is one of the biggest purchases you’ll ever make, but a lot of people aren’t sure how to get a home mortgage. Homes cost significantly more than even vehicles, and the steps for borrowing that much money are complex. Lending has its own terminology and regulations. Unfamiliar language can be intimidating. In this article, we’re going to take some of the mystery out of the mortgage application process.
At WestWind Homes, we want to put home ownership within reach of every Texans pursuing the American dream. That’s why we provide resources on our website and in person to help walk you through the steps to getting a home loan.
Steps of the Mortgage Application Process
The most exciting part of buying a home is actually getting the home, right? But that’s not where your journey starts. Before you even start looking at homes or developing plans for new home construction, you need to know what you can afford. Once you know that, you can start shopping for the home that fits your family’s needs and budget. Even when you find it, there will be additional steps needed to actually have the lender fund your loan. We’re going to break down the mortgage application process into these steps:
- Finding a Lender
- House Shopping
- Completing Your Loan Application
- Loan Processing
You can tell shopping is just one of those steps. Moving in doesn’t come until all are complete. Let’s get started so we can get you there faster.
The Right Lender for Your Mortgage Application Process
Not all lenders offer the same types of loans. It’s a good idea to talk to more than one so you know what’s available to you. You can ask family and friends what lender they’ve used or do online research.
Look for a lender who has experience working with people in your situation. If you’re a first time home buyer or you have military experience, that might affect the type of loan that’s best for you. If you have bad credit, some lenders will be less likely to help while others specialize in helping people get their credit ready to qualify. On a side note, if you’re wondering what type of credit you’ll need, check out our post What Credit Score Do You Need to Qualify for a Mortgage.
Read reviews to research that lender to find out what they’re like to work with. Then, talk to them in person to find out if you’ll be comfortable working with them throughout the mortgage application process.
Mortgage Loan Pre-Approval
This step is easy and fast, so you don’t need to put off getting started for fear of the mortgage loan application process. Once you’ve selected a lender, they can help you get pre-approved for a home loan.
If you’re looking at homes for sale, many realtors require you go through pre-approval before you can even start looking. A mortgage pre-approval is like a promise from a lender that, if you find what you’re looking for, they’ll loan you the money to buy it.
In other words, the lender has looked at your financial situation and determined how much money you have to put down, what you can afford as a monthly payment and that your credit score is high enough you’re likely to make that payment regularly. In order to make that determination, your lender will need information from you.
What You Need for Pre-Approval
Your lender will ask for the following:
- Your income – Paycheck stubs, tax returns, W-2s and verification of any additional income.
- Assets – If you own property or have money in the bank you’re going to use as your down payment, your lender will ask for documentation.
- Identification documents – You’ll need to prove you’re you. Use your driver’s license, passport or another valid ID card. You also need to know your social security number. Bring documentation for everyone whose income is needed to qualify for the loan.
The lender can run your credit report, so you don’t need to bring that with you. During pre-approval, your lender will help you decide what types of loans you qualify for and evaluate what’s most beneficial for you. When they’re finished, you’ll receive a mortgage pre-approval letter so you can verify your purchasing power.
And pre-approval is a powerful thing. It signals you’re committed and able to follow through. In top communities, homes sell fast. If a seller is entertaining multiple offers, pre-approval might be what makes them choose yours.
Plus, for you it eliminates a lot of headaches. You don’t look at homes out of your price range, and you’ve already completed some of the most important steps of the mortgage application process.
This is the best part. Sit down and list what you’re looking for in a home, then start looking at ones that might meet that criterion. A lot of people start their search online. That allows you to cover a lot of homes in a short period of time, weeding out the ones you’re not interested in. Some listings might not mention the pink bathroom tile or the fact seemingly generous square footage comes from an enclosed garage, but you’ll notice in photos. Online research also helps you identify areas of town you most want to be in.
But what if you don’t want a home someone has already lived in? What if your dream involves moving into a brand new home? That’s where we come in.
Whether you work with a realtor to buy an existing home or work with a builder to get a new home, this stage can last a while. The mortgage application process moves forward when you make an offer, put down earnest money and both parties have signed a purchase agreement.
Sometimes people find a home and make an offer before they start looking for a loan. If that’s you and you didn’t go through pre-approval, that’s okay. If you did, you’ve already gotten some of the preliminary work out of the way. To finalize your loan application, your lender will ask you to submit financial information. Even if you gave it during pre-approval, they’ll want to verify your financial situation is still the same. Here are some of the documents you’ll want to have ready:
- Information on current employers for everyone whose income helps qualify for the loan
- Paycheck stubs for the past month
- 2 years of W-2s
- Verification of pensions, social security income, disability income, child support or any other source
- Information on debts like car loans, credit card debt and student loans
- Other payments you have to make like liens, child support or alimony
- Your most recent bank statements
- Documentation of your investments
- Verification of any funds family members are giving you to use toward your home
- Last year’s tax return. If you’re self-employed, you’ll need the last two years.
- Proof you can acquire homeowner’s insurance
- The identification documents listed under pre-approval
- Information on the property you’re going to buy
- Additional documentation as required by lender
You’ll probably hear the word underwriting at this point of the mortgage application process. Underwriting is the process a lender goes through to ensure you meet all their requirements. It can feel like a lot of requirements, but keep your goal in front of you. Everyone has to go through underwriting to receive a home loan.
What Loan Processors Do Next
Your loan officer will get information from you, then go through the steps prescribed by their financial institution. They’ll order a credit report if they didn’t already get one during pre-approval. They’ll verify your documentation and order an appraisal and title search.
An underwriter will scrutinize everything you’ve submitted. They check and cross-check to make sure you have all your paperwork and everything is accurate. This is actually a good thing since it avoids surprises later at closing. Once they’re finished, they approve or reject your loan.
If you’ve been turned down for a home loan before, that doesn’t mean you’ll have the same experience with every lender. Keep reading to find how our Home Buyer’s Club could help you be in a new home in as little as 90 days.
Once you’re approved, the interest rate for your home becomes locked. Your loan officer orders title insurance so closing goes smoothly. Then, you receive a closing date.
Closing is when you receive the key to your new home and it becomes officially yours. It typically takes place at a title company or attorney’s office. You’ll sit down and a closing officer will go over what seems like a mountain of paperwork. Once buyer and seller sign everything, you get the keys and they receive funds.
You’ll get a closing disclosure a few days ahead of time. It will break down all the costs you’re agreeing to when you buy your home. Read it over carefully and ask any questions that come up.
You have the right to walk through the home you’re buying 24 hours before closing. That way you can make sure everything is still in order.
After closing, the fun begins. Your home belongs to you, and you get to start experiencing what you’ve dreamed about and worked toward for so long.
Help Through the Mortgage Application Process
At WestWind Homes, we’ll help you through the process. When you complete our Home Buyer’s Club program, we’ll help you get your credit ready for the mortgage application process, then we’ll walk you through. We’ll even give you $1000 you can use toward your down payment on a new WestWind home. Schedule your free consultation today.
Free Confidential Credit Consultation
Since 1993, we’ve been helping families move into our beautiful homes in vibrant communities faster than they thought possible. For more information, schedule your free and confidential consultation today!