The Mortgage Process in 6 Easy Steps
A mortgage loan process may seem to be overwhelming, especially for first-time homebuyers. But fortunately, the entire process is relatively straightforward and it is even made more effortless with the help of either a real estate agent or a mortgage loan officer. For you to have a good overview of the mortgage process though, below are the six major steps that you need to familiarize yourself with.
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The first step in a mortgage process is the pre-approval phase wherein a lender will need to screen you for them to identify whether you are eligible for a loan or otherwise. You can then use the mortgage pre-approval letter you get from the lender when you submit a bid to a seller.
Consequently, this is also the stage where you need to define how much you can afford to deposit and how long you intend to pay back the loan. The details you define will give you an idea of how much your monthly mortgage payments will be. If you are living in the UK, then you can use a UK mortgage calculator to compute your estimated monthly payments which will be based on the price of the property you are interested in, the deposit that you can make, the interest rate of the loan, as well as the loan term you are planning. From there, make sure also to organize all the necessary documents that you need such as a copy of your driver’s license, your social security number, as well as your tax returns to name a few.
Scouting for a Property
As soon as you have been pre-approved, the next step that you need to do is to scout for a property to buy because you already have some form of a guarantee that you will be able to secure a loan to pay for the house. In this case, it is a good idea to work with a real estate agent because they will be able to help you put up an offer once you find a viable property to buy. Keep in mind that aside from the price you have to pay, you also need to consider certain contingencies such as no major issues being discovered during the home inspection or the appraisal being close to the bid.
Application for a Loan
When you already find the right property to buy, the next step that you need to do is to apply for a loan. In this case, you need to familiarize yourself with the different types of loans such as fixed-rate or adjustable-rate loans, as well as forward or reverse loans among others. You also need to understand the loan estimate which includes all the terms of the loan, as well as all the estimated costs associated with it.
The next step after the loan application is the loan processing. In this step, all you need to do is to wait for the loan processor to check your financial standing in case you were not pre-approved, to begin with. Otherwise, the loan processor will simply review the documents that you have submitted, ensuring that the details you have provided are consistent and genuine.
After the loan officer has meticulously checked the veracity of your details, the next step of the mortgage process is underwriting. It is in this stage where the underwriter will either approve or reject your loan application. In case your application has been approved, the interest rate on the loan that you have applied for will already be locked but it is still up to you and the lender when you will do so. Just keep in mind that if you wait too long, the interest rate may go up.
Loan Approval and Closing
The final step of the mortgage process is the loan approval and closing. In this step, you will most likely be provided with a loan disclosure document a couple of days before the closing. Make sure that you thoroughly review the details of the loan indicated in this document before signing.
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The mortgage process usually begins with a pre-approval phase before you can begin shopping for a property. As soon as you have found the ideal property suitable for your needs and preferences, you can begin applying for a mortgage. From there, the loan will be processed and mortgage underwriting will also take place. Once this is done, you just need to wait for your loan approval and that’s it. The key is in working with the experts to help guide you through the entire process.