Understanding the Mortgage Process

Posted by Content Team on Oct 1, 2019 4:16 PM

Taking out a mortgage is the biggest financial decision most people will make in their lifetime. Yet because of the excitement of the home buying process, many people fail to fully comprehend what is happening as they are taking out a mortgage. This may be true particularly when homebuyers work with large, national mortgage brokers, where it is easier to get lost in the system. As a local mortgage broker, we have the ability to give our clients the personal customer service they need to help them along the way and make smart choices.

We believe it is critical that every one of our customers has at the very least a basic understanding of what they are doing when buying a home. It is important that people make educated choices, especially for something as important as a mortgage. An unwise choice could set you up for an unnecessarily stressful financial future. Having a map of what you are doing – especially before you start – will help to keep your feet on the ground, freeing you to dream up a million details about your future home.

Paperwork

The first part of the mortgage process is to complete the mortgage application form. To ensure the process runs smoothly, it is important that you have all of the necessary documentation available. This would include any details of your assets, debts, and proof of income.

Home Inspection

It is very easy to get house fever and fall in love with a property to the extent that you become blind to its flaws. Some of the issues may not even be visible or obvious. Since your lending institution wants to make sure they are making a good investment in lending to get you the money to buy a home, they will require a home inspection to expose many (but not all) of these issues. Do not let this “delay” frustrate you. Get the inspection report, understand what your inspector is saying, and ask yourself whether this house is worth all the problems that come with it. This is the time for you to negotiate on the price, which can save you a great deal of money in the long run, so don’t rush through this step.

Work with Your Local Mortgage Broker

Always remember that applying for a mortgage is a team effort. You need to answer any needs for information that your broker or lender has, so ensure that you respond to these queries as promptly as possible. Your mortgage can not and will not be signed off until all questions have been satisfactorily answered. This is one of the key steps where choosing a mortgage broker who can offer personal and local customer service makes a big difference in the home buying experience.

Arrange Homeowners Insurance

To protect you from the worst, it is essential that you have adequate home insurance. Your lender will not release the funds until they are satisfied that you have the requisite insurance in place. This is not the same as mortgage insurance, which you may or may not have to pay depending on the nature of your loan and the size of your down payment.

Be Patient

Although it can be frustrating at times, the process is quite complicated, and your lending institution needs to run certain checks which can take time. They will need to have the property appraised, to ensure it is in line with the amount of money you need to borrow. Another important check they will need to run is a title check, which is beneficial for you as it will guarantee there are no outstanding liens against the property.

Do Not Apply for Any New Credit

However, tempting it may be, do not take out any new cell phone contracts, personal loans, or credit cards leading up to or during your home loan process. Your priority should be keeping your debt-to-income ratio as low as possible. The higher your debt-to-income ratio, the more difficult it could be to get mortgage approval.

Lock-In Your Rate

Interest rates can and do change, so try and lock in your rate with your lender as soon as possible. At the very latest, your rate has to be locked in ten days before your closing date.

Keep On Top of the Process

Once you have approval, and all of the necessary checks have been completed, your lender will be in a position to set a closing date. They will also inform you of the amount of money you need to pay at closing. It is important that you are organized and prepared, so check all the documentation thoroughly along with your mortgage broker.

Set Up the Method to Pay Your Downpayment and Closing Costs

This will likely involve a cashier’s check or wire transfer, which can take a few days to arrange. Be ahead of the game and have things set up with your bank to make sure that everything will run smoothly on the crucial day.

Welcome To Your New Home

All that remains is to close on the property. Be sure to read all the necessary documentation, and never be afraid to ask questions before you sign on the dotted line. Once you have signed, you will finally be handed the keys to your new home!

We hope that this has helped give you an overview of what it will look like to take out a mortgage to buy a house. Whether this is your first time buying or you are a seasoned pro, we would love to be able to help walk you through the process. Give us a call, send us an email, or connect with us on Facebook, and we will be in touch!

Comments Off

Comments are closed.