The Mortgage Process, Step-By-Step
It’s normal to have questions about the mortgage process when you and your partner are ready to buy a home. Even if you’ve purchased or refinanced a property before, you may still need a refresher.
A personalized home lender will walk you through the mortgage process after you start working with them. Their job is to serve your family by ensuring you understand all loan options and choose one that matches your finances. Taking care of credit score, loan rate, and paperwork difficulties, they are available for any questions you have.
We want to walk you through the 7 simple mortgage steps for moving into your family’s dream home. You can walk into a loan office with confidence knowing the journey ahead with an experienced home lender.
What is a Mortgage?
A mortgage is a loan you get from a lender to finance your home purchase. When you take out a mortgage, you promise to repay the money you’ve borrowed at a specific interest rate. Paying your loan in a timely manner determines homeownership.
You and your partner will face questions of what loan type is best when purchasing or refinancing. There are a variety of options for mortgage loans, ranging from Conventional Home Loans to Jumbo Loans and VA Loans.
Before you get started, it is a wise step to speak with a home loan professional or experienced loan officer. They compare your financial picture with your family’s ideal home to figure out what mortgage is best.
Basic Steps in the Mortgage Process
A mortgage will likely to be the largest, longest-term in your lifetime. The more you understand how the mortgage loan steps work, the easier it will be to choose a package that’s right for you.
1). Pre-Approval
The first step to turning the keys into your brand new home is getting pre-approved. Take time to know how much you can afford before you start searching, including your down payment.
Mortgage pre-approvals show the seller you’re a serious buyer. This is especially helpful in a hot market where it is common for sellers to entertain multiple, simultaneous offers.
As a side note, pre-qualified is not the same as pre-approved. Pre-qualification is a more informal, quick estimate of how much you may be able to borrow, based on a few general questions.
Pre-approval involves supplying accurate documents showing your overall financial status including debt, credit report, income, and assets. It will let you know how much a bank is willing to lend to you, securing a lender’s interest.
2). Find Your Dream Home
You can start shopping for the home that fits your family’s lifestyle after a personalized lender has given a pre-approval. They will recommend a real estate agent, who can join you on the exciting home buying journey.
After the negotiating is over, you and the seller will agree to a purchase price that the lender backs with your home loan. And they can move you into the loan estimate to finalize the property purchase.
3). Loan Estimate
A Loan Estimate comes after you’ve found a property and there is a firm address and sale price. It’s the statement of your mortgage terms and estimated fees.
This includes things like closing costs, the amount of your monthly payments, and pre-payment penalties. These details are necessary for the lender to give you an accurate estimation of your mortgage terms.
Once you’ve compared Loan Estimates and selected a lender, you need to sign the form. This allows the bank to move forward with your mortgage application for your loan.
4). Entering Escrow
A separate finance company will open an escrow account when you and the seller iron out a home price. They become a neutral third-party responsible for collecting funds and documents during the closing process.
When you’re ready to close on your house, you will need to work with a title company, who ensures the seller has the right to sell the property. Their role is to verify the legality of your new property deed.
5). Home Appraisal
As a condition of purchasing a home, an appraiser must evaluate it. Your family can have confidence in paying a fair price for the home if they accurately estimate the home’s value. Your lender will arrange for a neutral third party to provide the services.
The appraisal is important because the lender will not loan more than a property’s value. If the property appraises at or below the sale price, the purchase of your home can be completed.
It is not unusual for appraisal guidelines to change from time to time. In fact, VA, FHA, and Conventional loan programs all have separate appraisal ordering policies. This is another reason it is smart to work with an experienced mortgage agent.
6). Closing Disclosure
You and your partner must fill out the necessary closing documents with your attorney or title company. One of the most important forms is the Closing Disclosure, which is similar to your loan estimate. It lays out your final loan terms so you understand exactly what repayment looks like.
It is a smart plan to take the time to compare the details of the original Loan Estimate with the Closing Disclosure to double-check such things as your interest rate, sale price, the loan amount, and type of loan.
7). The Big Day Arrives
At this point, everything should go smoothly so you can sign all the paperwork, receive your house keys and officially become a homeowner.
Expert Advice on Your Home Loan
With our Highly-Motivated Vercellino Team, your family can enjoy each other in a new home or vacation home. We’re a group of personalized home lenders that work with you every step of the mortgage loan process.
Home buying is an adventure and our office wants to help you and your spouse get in your dream property sooner. We even have a Prequalification Specialist and Premier Processor to explore the best lending solutions and process your loan efficiently.
Our team would be honored to take your call to tell you more about the mortgage process and the steps to obtain a loan. Willing and happy to answer your questions, we can guide you through applying for a mortgage.
Contact our Arizona office today at 480.800.8387 to get started!