Getting a Mortgage

Obtaining a mortgage can be intimidating and confusing. Here is some helpful information to get you started.  Also, if you are looking for a highly qualified mortgage lender contact me so I can refer to you my preferred lender.

Your Credit Score is also very important – Here are some helpful tips!

The Importance of Good Credit and How to Boost Yours

Step 1: Mortgage Application & Pre-Approval Letter

Before an application gets filled out, it’s important to first asses yourself financially. Figure out how much money you have, how much you need to borrow, and how much money you have for a down payment. It’s always critical to sort out how much you can afford so that when you apply for a mortgage you will be able to financially sustain yourself. Once your application has been received, the mortgage application process will begin by verifying the information you have provided.  Your mortgage lender can get you pre-approved for a mortgage so you can begin looking at homes!

Step 2: Choose the Right Mortgage Program

Like all homes, mortgages also come in all shapes and sizes. You have to pick which loan is more aligned with your financial situation and goals.

A) Conventional Loan

Conventional loans require a down payment larger than government-backed loans and a higher credit score.  There are more options for conventional loans which can lead to lower monthly payments.

B) Government Loan (FHA)

FHA loans are government-backed loans that make it easier to purchase a home if you have a small down payment or a low credit score.  With this type of loan, you will be required to pay Private Mortgage Insurance (PMI).

C) Fixed Rate Mortgage

Fixed Rate Mortgages are often safer than Adjustable Rate because the mortgage rate will remain the same over the life of the mortgage.

This type of loan should appeal to you if you:

• Plan to live in the home for more than 5 years
• Like the stability of a fixed interest payment
• Think your income and spending will stay the same
• Don’t like the risk of having a higher monthly payment

D) Adjustable Rate Mortgage

Adjustable Rate Mortgages tend to be riskier because the interest rate on the loan can go up or down which means monthly payments can increase or decrease.

This type of loan should appeal to you if you:

• Plan to say in your home for less than 5 years
• Don’t mind having your monthly payment increase or decrease
• Are comfortable with risk of possible payment increases in the future
• Think your income will probably increase in the future

D) Lines of Credit – HELOC

Line of Credit is becoming an innovative way to finance your home purchase. You can take the amount you need from the credit limit that you were granted. You only pay interest on what you use and this money can be put towards things like home renovations, a child’s education, and debt consolidation.

Step 3: Mortgage Submission and Approval

Once you select/qualify the appropriate mortgage program, you will submit this information to your mortgage lender along with any other required documentation. You will then wait for the mortgage approval from the mortgage lender after all documents have been processed, through initial underwriting, and final underwriting.

Documents Needed (but not limited to)

• Drivers License
• W-2 or 1099 – 2 years worth
• Paystubs and other sources of income – 30 days worth
• Bank Statements & other Assets – 60 days worth
• Tax Returns – 2 years worth
• List of Monthly Debt Payments
• Records of rent payments, bankruptcy, divorce, foreclosure, etc.

Step 4: Closing Process

The Lender will send you a Closing Disclosure three days prior to your scheduled closing date.  The closing disclosure presents all of the loan details along with projected monthly payments, interest rate, fees, and closing costs. First you will review all the terms and conditions prior to signing to make sure all information is correct. Signing takes place in front of a notary public or lawyer. Bring a cashier’s check for the down payment and closing costs if required. You will also need to show homeowners insurance policy and proof of payment.