Finding a new home can be exciting for everyone but navigating the mortgage process can be overwhelming, especially for the first-timers. New home buyers may not know the steps to be taken for a smooth loan process or ensure their mortgage application stays on track.
That is why I thought of compiling a quick guide for my readers to ease up their loan process and save themselves from making wrong choices or decisions. Here are five important steps of the mortgage process, from start to finish –
This is the first milestone of the home loan journey. It comes after your prospective lender gets information with regards to your income and debts. Here, a determination is made as to how much you can pay for the house. Since different loans have different valuations, your mortgage company may want to know your ability and willingness to pay it back within the time frame.
- Loan Programs and Rates
It is the first choice of a borrower to pick out mortgage programs of his needs. An astute borrower analyzes the various options based on different rates, points, fees, and other factors and chooses the most suitable one. However, this step can be a little frustrating and time-consuming, so contacting a mortgage broker is a good bet.
- Loan Application
Well, you can call this step as the true start. Here, you have to complete your application and provide all the required documentation. These documents, at times, can vary from lender to lender, but generally consist of credit reports, passport size photographs, identification proofs, residence proofs, salary and income tax statements, information about your other assets and debts or financial obligations.
- Loan Estimation
A loan estimate is a form that you receive after applying for the mortgage, typically within three days of the application. It gives you all the details you request or need, such as estimated mortgage rate, monthly payment, and total closing costs for the loan. It also indicates any changes in the interest rates and monthly instalments, if any expected in the future. But, note that it nowhere implies whether your loan is approved or denied. It only shows the terms in case you move forward.
- Notification to Proceed
After receiving mortgage estimates, you can take your time and decide whether or not to go ahead with that particular loan program. If you agree with the terms and estimations, take the next step of informing your lender or broker about your intents either by writing them a mail or confirming over the call. However, bear in mind that you take no longer than ten days and be prepared for the revision in estimated costs if the market conditions changes.
Once your application and intentions to proceed are submitted, you can sit back and let the process take its course. Wait for the loan processor to verify your credit reports, bank deposits, and other payment histories. If everything is in order, you can soon get the funding for your home.