How to Get a Home Mortgage

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  • 8/12/2019 How to Get a Home Mortgage


    How to Get a Mortgage Home


    The Mortgage Loan Process and

    FAQs for Home Buying &

    Renance Home Loans

  • 8/12/2019 How to Get a Home Mortgage


    Ta!e of "ontents

    "ha#ter $ % The Home Buying Mortgage Process

    "ha#ter % Fre'uent!y As(ed Questions aout Buying a


    "ha#ter ) % The Mortgage Renance Process

    "ha#ter * % Fre'uent!y As(ed Questions aout a Renance

    "ha#ter + % Reasons for Renancing a Mortgage

    "ha#ter , % "ommon Ty#es of Home Loans

    "ha#ter - % Questions to As( a Mortgage Lender

  • 8/12/2019 How to Get a Home Mortgage


    "ha#ter $ % The Home Buying Mortgage Process

    Getting a mortgage to buy a home starts before you even start looking at homes for

    sale. For example, did you know that real estate agents and home sellers consider a

    pre-approved buyer's oer more attractive than the same oer from a buyer who

    has not been pre-approved for a mortgage

    !tep "# Get pre-approved

    $nce you've decided that you want to buy a home, you should determine what

    mortgage payments you can aord. %here are many tools available such as an

    aordability mortgage calculator that gives you a general idea of what your

    payments would be, but to get a better idea of the price range of homes to view,

    you should get pre-approved. & mortgage pre-approval is benecial in many ways.

    First, it gives you an idea of what loan amount and purchase price you can aord.

    !econd, it strengthens your oer to the seller and the seller's real estate agent.

    %hird, by getting pre-approved, you're getting a (ump start on the mortgage

    approval process. $nce you nd your home and open escrow, you're already a few

    steps ahead.

    !tep )# *etermine which home loan best suits your needs

    %here are many home loan options available from rst-time buyer programs to

    traditional conventional, (umbo, and F+& loans. %here are year and " year xed

    loans as well as ad(ustable and hybrid loans such as a /" &01 or /" &01.

    !tep # 2ontact a real estate agent and start shopping

    $nce you've been pre-approved for a mortgage and have an idea of what pricerange you 3ualify for, you can work with a real estate agent to view homes for sale

    in the areas you'd like to live. $nce you nd a home you like, you can work with the

    real estate agent to draw up an oer and complete a purchase agreement. %he

    seller has the option to submit a counter-oer and you may go through several

    rounds of counters. $nce you and the seller agree to the price and terms, escrow

    will be opened. %ypical escrow periods are days but 4 and 5 day escrows are

    not uncommon.

    !tep 4# 0eview your home loan application and update your le

    *epending on how much time has passed since your mortgage pre-approval, thelender may need to collect some updated information and updated documents from

    you. %he mortgage lender probably has everything needed, but it is a good idea to

    go over the home purchase document checklist to ensure everything is complete.

    $nce the mortgage lender has updated your le, your home buying specialist will go

    over the details of your home loan program, conrm the rate that you want, and go

    over your closing fees. %he lender should make sure that you understand every

  • 8/12/2019 How to Get a Home Mortgage


    detail of your mortgage program and answer any 3uestions you have before moving


    !tep # 6ock your mortgage rate

    &t this point, if you'd like to secure your mortgage rate, your lender will send you a

    lock agreement to conrm the terms of the loan and rate. $nce you review and

    approve the lock agreement, your home buying specialist will collect a lock deposit

    fee to lock in your rate. %he lock deposit will be credited towards your closing fees

    at the end of the transaction. $nce the lender receive the signed lock agreement

    and lock deposit, the lender will send you some preliminary disclosures such as the

    good faith estimate and truth-in-lending disclosure to review and sign, which detail

    the terms of your loan.

    !tep 5# +ome inspection and appraisal

    !hortly after escrow is opened, it is advisable to schedule a home inspection with a

    professional who will walk you through the property to look for any red 7ags such as

    structural damages or appliances that may not be working properly and other items

    that may need to be xed. 8t is a small investment for some peace of mind. &ny

    ma(or issues would need to be addressed before the close of escrow date. 9hile

    your loan is being reviewed and processed, the lender will schedule an appraisal

    appointment with the seller's agent to conrm the value of the home. :nlike a home

    inspection, that appraisal is a re3uirement to determine that the home is worth

    what you are paying for it.

    !tep ;# +ome loan approval , signing and closing

    9hen the mortgage lender has everything needed, your account manager will

    submit your complete le to the underwriting department for approval. $nce

    approved, the lender will prepare loan documents for you to sign. Generally, you will

    sign your loan documents at the escrow or title o

  • 8/12/2019 How to Get a Home Mortgage


    "ha#ter % Fre'uent!y As(ed Questions aout Buying a Home

    =uestion# +ow do 8 know how much 8 can aord

    %here are several factors that determine the loan amount and purchase price that

    you can aord. For 3ualication purposes, lenders look at income, debt, assets >how

    much money you have for the down payment, closing fees, points, and other funds

    necessary to close your loan?, as well as credit. %here are many dierent loan

    programs that oer dierent terms and rates, and some re3uire lower down

    payments than others and oer more 7exibility in credit and income. %he best thing

    to do is get pre-approved so that you know what loan programs you 3ualify for, the

    price range you can aord, and what your monthly payments will be. 6enders will

    often provide a pre-approval at no cost. @ou can also use an aordability calculator

    to nd out what your payments would be and determine what purchase price and

    loan amount is comfortable for you.

    =uestion# +ow much money do 8 need to buy a home

    %raditional conventional nancing re3uires a down payment of " to )A of the

    purchase price of the homeB however, there are other programs available such as

    an F+& loan that allows you to buy a home with as little as .A down. 8n addition

    to the down payment, you should be aware that there are other fees associated

    with purchasing a home. For example, there are closing fees, pre-paid interest, and

    prorated items such as property taxes and homeowner's insurance.

    =uestion# 9hat's the dierence between a pre-3ualication and a pre-approval

    & pre-3ualication is an informal cursory review of your income, assets, and credit,

    usually conducted over the phone. $nce the necessary information is gathered, the

    lender issues an estimate of loan amount and purchase price for which you 3ualify.

    & pre-3ualication still gives a potential buyer a good idea of aordability but it is

    not as comprehensive as a pre-approval which is a more formal, more intense

    process where income, assets, and credit are documented and veried. & pre-

    approval is a conditional approval that holds more weight with a seller and the

    seller's real estate agent than a pre-3ualication, especially if you are competing

    with another oer.

    =uestion# *o 8 need a home inspection

    &lthough a home inspection is not re3uired, it is a good idea to obtain the servicesof a professional 3ualied inspector to help you determine the condition of the

    home you are looking to purchase. & professional inspector will look for any

    structural issues as well as mechanical problems that may exist in the home that

    could cause problems in the future. 8n addition to a structural review, an inspector

    will also check faucets, toilets, appliances, and other items in the home to make

  • 8/12/2019 How to Get a Home Mortgage


    sure everything is in working order. 8f something needs to be addressed, you can

    discuss items prior to closing.

    =uestion# 9hat type of documentation do 8 need for a purchase loan

    !tandard documentation collected for a purchase transaction includes information

    regarding your income such as paystubs covering the most recent days and 9-)s

    for the last two years, asset information such as bank or mutual fund stock

    statements covering the last 5 days showing source of funds for your down

    payment, closing fees, points and pre-paid items needed to close your loan.

    =uestion# +ow long is the purchase process

    & typical escrow period is , 4, or 5 days. %he escrow period, dened on the

    purchase contract and agreed upon by both buyer and seller, is usually what

    dictates when your loan closes. 8f you have already entered escrow and are closing

    in less than days, the lender can still close your loan on time if the lender is

    brought into the loop as soon as possible.

    =uestion# 9hat happens at the loan closing

    %ypically, you will sign your loan documents at a designated settlement o

  • 8/12/2019 How to Get a Home Mortgage


    "ha#ter ) % The Mortgage Renance Process

    Cefore you renance your home, it's important to know how renancing works, what

    3uestions to ask, research what options are available, and determine whether or not

    renancing will benet you.

    !tep "# *ene your goals

    $ne of the most important steps before deciding whether or not mortgage

    renancing can benet you is to determine what your ob(ectives are. 8s your goal to

    reduce your monthly payment or pull cash out of your e3uity for home

    improvements or debt consolidation &re you looking to x your ad(ustable rate

    $nce you determine your goals, you can take a look at the various home loan

    programs available to decide which loan option helps you achieve those goals.

    !tep )# 8n3uire online or call a lender

    $nce you've dened your goals and researched all the loan options available, youcan submit your information online or pick up the phone. @our 1ortgage Canker can

    answer any 3uestions you have about how to renance, the loan program you're

    considering or can make a recommendation for you given your individual goals. %he

    lender should make sure that you understand every detail of your loan program and

    answer any 3uestions you have before moving forward

    !tep # !elect your loan program

    8f you decide you'd like to move forward with the renance, your 1ortgage Canker

    will conrm your loan program, rate, and payment. &t this point, you can lock in

    your interest rate to protect you against any 7uctuations in the market. $nce yourrate is locked, you should receive a lock agreement conrming the terms of your

    loan and your banker may collect a lock deposit fee to naliDe the lock. %he lock

    deposit should be credited towards your closing fees at the end of the transaction.

    !tep 4# !ubmit your documents

    &fter the lender receives the signed lock agreement and lock deposit, your banker

    will provide you a list of items to fax or e-mail so that the lender can verify all your

    information to get your loan approved and closed 3uickly. 2lick here for the

    renance document checklist. %he lender will also send you some preliminary

    disclosures such as the good faith estimate and truth-in-lending disclosure to reviewand sign which detail the terms of your rate and loan. 8n a few days, the lender will

    contact you to schedule the appraisal inspection. 8t is important to schedule the

    appraisal appointment as 3uickly as possible to prevent any delays in your closing.

    !tep # %he lender handles it from here

  • 8/12/2019 How to Get a Home Mortgage


    &fter the lender receives all your documents, your assigned &ccount 1anager

    should contact you to go over the next steps, which includes opening escrow,

    ordering the preliminary title report, and coordinating with all the necessary parties

    to ensure your loan progresses smoothly and 3uickly. $nce the lender has

    everything needed, your loan le will be submitted to the underwriter for review

    and formal approval.

    !tep 5# 2lose your home loan

    :pon approval, the lender should contact you to schedule a loan document signing

    appointment. %his appointment will generally take minutes to an hour and can

    be done at the convenience of your home or at an approved settlement location.

    &fter the lender receives the signed loan documents, your loan should close

    approximately days later.

    1ore about a renance mortgage at loan*epot
  • 8/12/2019 How to Get a Home Mortgage


    "ha#ter * % Fre'uent!y As(ed Questions aout a Mortgage Renance

    =uestion# !hould you renance

    %o determine whether or not it is a good idea for you to renance, you should look

    at your specic situation and your motivation for renancing. %he most common

    reasons to renance are to reduce your rate and/or payment, convert from an

    ad(ustable to a xed rate, or pull cash out of your e3uity to consolidate debt or

    improve your home. 8f your ob(ective is to reduce your rate and payment, you

    should review your current interest rate and see how much you can save with a

    point loan and then determine if it makes sense to pay points to reduce your rate

    further. 8f you are converting your ad(ustable rate into a xed rate, you may actually

    see an increase in your rate and payment but youEll get peace of mind knowing your

    rate will never increase again. 8f you are using the e3uity in your home to

    consolidate debt, your overall loan balance and payment may go up, but you will

    save monthly because you will eliminate the monthly obligations that you are

    paying o. @our mortgage banker can run some numbers for you and help youdetermine whether or not renancing makes sense for you.

    =uestion# +ow much can you save

    very situation is dierent. 8t depends on what your current interest is and what

    your motivation is for renancing. 8f your current rate is higher than what is

    available in the market, it probably makes sense to renance. %o get an idea of what

    you could save by renancing, check out a payment savings calculator and input

    numbers specic to your situation.

    =uestion# 9hat if you have a second mortgage

    %ypically, any second mortgages are paid o through the renance. %he lender will

    consolidate both loans into one new rst mortgage and you will only have one

    payment each month. 8f youEd prefer to keep your second mortgage intact, the

    lender may be able to ask your second mortgage lender to remain in second

    position and allow us to renance the rst loan. %his process is called subordination

    and there is typically a fee charged by the second mortgage lender.

    =uestion# 9hat are the costs associated with renancing

    Fees associated with renancing vary from lender to lender but there are standard

    fees that are typical across the board. %hese fees include rd party fees such ascredit report, title, escrow, notary, and recording fees. $ther fees include the

    appraisal fee and lender fees such as processing and underwriting. 8f you are paying

    points to lower the rate, the cost of each point that you pay e3uals "A of your new

    loan amount. &side from the closing fees, there will be prorated pre-paid costs...


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