Understanding the Mortgage Application Process Step by Step

First time buyers and even those who have gotten a mortgage several times in the past often are unsure about the process of securing a mortgage. This is totally understandable—it is a complex web of steps, especially with everything required to find the perfect home thrown into the mix.

The good news is, your mortgage broker at Homelend USA is here for you and has done this many times before. We see it as our responsibility to help you take the pain out of the process and to simplify the steps to securing the right mortgage for you and your situation. One thing that helps for those anxious or overwhelmed about what it will take to secure a mortgage is to see the step-by-step process from start to finish.

1. Initial chat. The best first step is to talk to your mortgage broker who can ask questions to figure out your goals, credit score, available down payment and affordable monthly payment and find the best loan options available to you. During this conversation, your mortgage broker can give you a quick rundown of what to expect during the process and discuss various options. Exchange contact information and let your mortgage broker know your favorite way to communicate—text, email, phone calls, etc.

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2. Pre-approval. Then you provide a few bits of information to secure a pre-approval letter—before you even start shopping for homes. Why is this important? This way you understand your buying power and can shop for the best home in your price range. Additionally, when you find your dream home, you can present a strong offer. In order to be pre-approved for your mortgage, you will just need:

  • W-2s (or tax returns if self-employed) from the past 2 years
  • Paystub that lists your year-to-date income
  • Bank account and investment account statements
  • Driver’s license or valid identification

With this information, your mortgage broker can let you know your buying power and prepare a pre-approval letter that can be included with any offer you make.

3. Complete your loan application. You’ve found your perfect home, it has passed the home inspection, and a closing date is set! Now it’s time to apply for your loan and gather the rest of the documentation. Your mortgage broker will make this as painless as possible, with reminders of what is needed and technology that makes uploading the information simple. Once you’ve uploaded the documents, your mortgage broker will complete the application. This application shows the lender your financial history and current status. Information on a loan application includes:

  • Residence information for at least 2 years, i.e., own vs rent, if you are a current owner, do you plan to sell or keep existing residence, mortgage, insurance, and tax information.
  • Employment and income information for at least 2 years.
  • Asset account statements (checking, savings, investments, and retirement).
  • Debt account statements (for example, credit cards, mortgages, student loans, car loans, alimony, child support).
  • History of bankruptcy or foreclosures for past 7 years.

Much of this information is obtained from the credit report, but it is still the buyer’s responsibility to disclose all debt. Upload the information and we will take it from there!

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4. Review your loan estimate. Once your mortgage application has been received, you will get a loan estimate. This document will show you very clearly the estimated payment, interest rate, and the costs of applying for a loan. Conveniently, you can even esign this document.

5. Processing. After you apply, you will also get a commitment letter, which is a loan offer that tells you what you have to do in order to close. Throughout the rest of the time preparing for closing, you will work your way through these items. Usually this includes:

  • an appraisal that at least matches the price of your offer
  • a clear title without issue
  • home insurance
  • your finances remain the same and you have money to cover the downpayment and closing costs—for this you need recent W2s, paystubs, tax returns, asset statements

6. Secure mortgage commitment and understand costs. Once the documentation has been gathered, your mortgage goes through underwriting where all information is reviewed. If approved, you will receive a mortgage commitment letter that does not have conditions. Then you can see your closing disclosure that includes your final and official mortgage payment, interest rates, and closing costs.

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7. Close on your home! Your mortgage broker will let you know the amount of money you need to bring to closing for downpayment and closing costs. You will bring this in the form of a certified check. Then you will sign the required documents for closing, and the loan is yours! Congratulations, and welcome to your new home!

And remember, you do not need to navigate this process on your own. Your Homelend USA mortgage broker will be with you every step of the way, helping to make sure you understand deadlines so your mortgage can be secure and complete for closing.

Interested in working with the experts at Homelend USA to secure your mortgage? Contact us today to set up an initial meeting!

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