If you’re thinking about purchasing a home here’s what you can expect, in a nutshell, during the mortgage application process.
Know Your Budget
To determine how much house you can comfortably afford you can make use of home affordability calculators available online. You’ll need a tally of your total monthly debts, and your annual income.
If there’s a home in particular that you’re interested in you can input the listing price into a monthly mortgage calculator to see if it fits within your budget.
It’s always good to have a clear budget in mind when home shopping so you can spend your time wisely. (Once pre-approved for a loan you’ll have a more solid figure to work with).
Complete an Application
Typically you can complete most of your mortgage application process online, in conjunction with corresponding with your loan officer by phone, and other means.
Provide Documents That Demonstrate Your Income
You’ll need to submit documents that verify your financial standing to determine how much you can afford for your mortgage payment. Paystubs, bank statements, past tax returns, W-2s, and other relevant paperwork will need to be provided to consider income, debt, and the amount of cash you have available for emergencies.
Pick the Loan and Down Payment Options Best for You
Following your application for pre-approval your loan officer will review your documentation and recommend loan options. Your choices may include conventional, FHA, jumbo, and other types of loans. Each has its own eligibility standards, and requirements for a down payment. To help you decide on the best option for you, you can ask your loan officer to calculate and compare things like monthly payments, total interest costs, and insurance requirements.
Lock-In Your Interest Rate
Because interest rates change daily you should let your loan officer know when you win an offer on a house and have a contract so they can lock in your rate.
Be Careful With Your Finances While You Wait to Close
While your loan is being processed avoid incurring new debt and buying big-ticket items, since your pre-approval is based on the finances you provided on your application—if those details change so might your loan approval.
This is the time to ask you loan officer questions: How much money do you need for closing? Are there other services you can benefit from?
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