Buying your first house is the most exciting time in a person’s life. It is also quite a bit overwhelming at times. Getting a mortgage is not easy for all home buyers. Unfortunately, it is not something students are taught in school. Thus, many homebuyers do not understand the steps of how to get a mortgage. If you are in the process of buying your first home, you may be a bit confused by the mortgage process. Learn all about getting a mortgage in this post, so that you can buy your dream house as painlessly as possible.
Figure Out Your Financial Standing
The first step to getting a mortgage is to know your personal financial standing. You need to familiarize yourself with your credit score. You should even go one step further and request your annual credit report. This way, you can alert credit reporting agencies to any errors on your credit report that may impact your ability to get a low interest rate mortgage. That will help you fix credit as much as possible to improve your odds at getting approved for a mortgage. Mortgage seekers should look to have a credit score of at lease 680 if they want to be able to qualify for a mortgage. Determine your financial status to start the process of applying for a mortgage.
Next, you should get pre-approved for a mortgage. This should happen before you ever start looking for homes. That way, you can determine how much of a budget you have for home buying. You can get pre-approved for a mortgage at any of the big institutional lenders, like your nearest bank branch. Of course, you do not necessarily have to commit to signing with that lender when the time comes for you to officially sign the paperwork. You can also find other mortgage lenders to consider. But first, you should get pre-approved for a mortgage before you start shopping for homes. This way, you have a rough idea of how much you can spend on a house to narrow down you search. This is the second step of the mortgage lending process.
Consider Your Options
There are many different types of mortgages for home buyers to consider. You must determine which one is best for you own personal financial situation. You can choose from conventional mortgages or government backed loans. In addition, you should also decide whether fixed rate mortgages or adjustable rate mortgages are best for your needs. Home buyers should also have an idea of the mortgage term they would like to agree upon, as well as what their ideal mortgage APR is. Consider all of these options before applying for a mortgage. Then, you will be better able to move on to the next steps of getting a mortgage to buy your first home.
Decide Which Mortgage Lender
Now comes the time for you to decide which mortgage lender is the right one for you. This is the most important part of the entire process of getting a mortgage. You should look to family and friends for recommendations. You can also search online for lender reviews and testimonials. Use all the information you have at hand to make the best possible pick. Otherwise, it could cost you a lot of money and heartache over the years of your mortgage term. Make a wise decision, then you can officially begin to apply for a mortgage with this lender.
Submit A Mortgage Application
Finally, you can submit a mortgage application to the lender you have chosen to go with. This time can be the most nerve-wracking time of the entice mortgage application process, even if you have been pre-approved. In order to apply for a mortgage, you must have a bunch of financial documentation and information at the ready. This information includes your W-2 forms from the previous two years, your last 30 days worth of pay stubs, two years worth of federal tax returns and proof of any other sources of income from any finance sources. In addition, you will also need your most recent bank statements, an ID and social security number and details on your existing long-term debts like student loans or auto loans. Once you have all that personal documentation ready, you will visit the lender’s office and fill out your mortgage application. Then, all there is to do is wait for the mortgage underwriting process to be complete to see whether or not you got approved for the mortgage.
For those who are buying a home, applying for a mortgage is a stressful time. But, it does not have to be if you know what you are doing. Use this mortgage application process guide to help you prepare. The steps detailed above tell you all the nuances you need to know about getting a mortgage. That way, you can be prepared for everything that will come your way in the coming months. Being prepared will ultimately help you get approved for a mortgage so that you can buy the home of your dreams. Then, all you will have to worry about is figuring out who pays closing costs. Good luck and congratulations in advance!