Saturday, October 27, 2012

Steps to getting a Mortgage

The steps one must go through to getting a mortgage. By making yourself familiar with the process, you will better understand what is required of you and how to prepare. After all, the more knowledgeable you are the more comfortable and in control you will  feel.


1. Organize Your Documents


In order to obtain a mortgage, your lender will require certain documentation from you to make sure that you will have the ability to repay the loan you take out. Such documentation includes proof of employment, credit history, tax returns, pay stubs, bank statements, divorce and child support statements if applicable, as well as any other information that the lending company feels might be necessary.


2. Qualification


Before you apply for a loan, getting qualified will help you establish how much you can borrow. When purchasing a home, there are two options one may choose from to qualify for a loan. The first option, pre-qualification, is a quick process that usually happens in a matter of minutes. While pre-qualification is helpful, your other option – pre-approval – is more beneficial and gives you better leverage when negotiating with the seller. Getting pre-approved also lets you focus on homes within your price range instead of wasting time looking at homes that you won’t be able to afford. Finally, when it comes time to close, the process will go rather quickly since your loan has already been approved.


3. Find the Right Loan Program


While searching for the right loan program, there are many things to take into consideration. For example, you might want to think about how long you plan on keeping the loan. The length of your residence will determine the type of loan you want to get (i.e. adjustable or fixed). To figure out which loan program is the best, one will need to compare different programs and everything that each one involves such as rates, fees and points. The whole process can be tedious and difficult at times, which is why a qualified loan officer can help you make the right decision.


4. Obtain Loan Approval


The process of obtaining loan approval involves the following steps:

  • Review of loan application (Be sure to fill it out completely).
  • Verification of credit history, employment history, assets such as bank accounts and mutual funds, property value and any additional information that the lender might require

There are also a few things that you can do to improve your chances of getting the loan approved.

  • For any requests of additional documents and information, respond promptly.
  • Do not make any major purchases such as a car or new furniture until the loan is closed. Increasing your debt can have the opposite affect on your application.
  • Make sure you will be in town for the closing date. If you cannot be there for the closing of the loan, you can carry out a power of attorney to authorize someone to sign on your behalf.

5. Close the Loan


Once the loan is approved, your next step will be to sign the final loan documents, which usually takes place in the presence of a notary public. Be sure to verify the information within the document, especially the interest rate and loan terms. Also check to see if your name and address are correct. Finally, don’t forget to bring a cashier’s check for your down payment and closing costs.