Step-by-Step Guide to the Mortgage Process

Before you buy a home, it is imperative that you nail the mortgage process. The steps below will help you to build a plan for your home buying experience, and are sure to keep you confident, informed, and organized along the way.

1. Meet With A Loan Officer

As you begin the home buying process, start by meeting up with a loan officer. This meeting with your loan officer will act as your point of reference for the rest of the journey. A loan officer will give you a picture of the box that you need to build in–the timing of the market, the size of the loan, and whether or not those factors add up to you buying your dream home. Set up a free consultation with a lender, and find out what you can do to move the mortgage process forward.

2. Strengthen Your Credit Score

Your credit score is that tricky, three-digit number that plays a big factor in your home loan. Most lenders offer better rates for scores around 720. To get a competitive interest rate and nail down the cheapest mortgage payment, focus on strengthening your credit score before you move on to the loan process. Pause on all new credit activity, and try to eliminate any outstanding debt.

3. Estimate What You Can Afford

Next, you’ll need to make a list of a few important numbers. This list should include your gross income, total amount in savings, total debt, total monthly bills, and credit score. Then use a mortgage estimating calculator to help you decide what you can afford.

4. Determine What You’re Looking For

Now the fun begins. After your budget has been established, it’s time to get a strong idea of what exactly you’re looking for. Wrestle with the vision of what you think you want and what you know you need. Look into the selling prices of comparable homes in the area to get an estimate of the kind of house you can afford.

5. Save for a Down Payment

Set a goal to make a 20% down payment on the home. While that’s ideal, it’s certainly not necessary. There are some loan types that even make it possible for you to put zero down. While a 20% down payment does allow you to avoid primary mortgage insurance, we recommend discussing your options with a loan officer and using a Down Payment Calculator to determine the correct amount for your situation.

6. Meet with a Loan Officer and Get Pre-Approved

Schedule another appointment with your loan officer so you can get pre-approved. This shows sellers that you’re a serious homebuyer. They want to see that you’ve met with a loan officer, and that you could buy the home if they accepted your offer. Typically, the number that you qualify for is more than how much you spend.

Discover what loan types are right for you in our free guide »

7. Gather Your Information

Gather the necessary documents to evaluate your finances. Be prepared to present them with the following pieces of information: all outstanding debt, loans, pay stubs, your last three years of tax records, and documentation of all credit accounts. These will offer an accurate picture of your financial situation to the experts.

8. Meet with a Real Estate Agent

Ask your loan officer what real estate agents they recommend. After working with you and learning your situation, your loan officer will be able to guide you to a great agent. Once you choose your agent, have a sit-down meeting and make sure you’re all on the same page with your desires, expectations, and budget limits. Discuss the current local real estate climate, and any potential issues you might run into during the process.

9. Look for Houses and Make an Offer

Now that you have a pre-approval letter and you’ve met with a real estate agent, it’s time to start shopping for a home. Look for houses under your pre-approval limit. This will narrow down the neighborhoods you’re interested in, and the list of homes you want to see in person.

10. Stay in Contact with Your Loan Officer

Stay in contact with your loan officer. You will work together throughout the entire home buying process, but even more so during these last steps. When you’re ready to buy, your loan officer will get you the rate and loan type you need. They’ll be your guide throughout the financial calculations and paperwork.

11. Closing Costs

Closing costs are the last big lines to cross off before the home is yours. Closing costs can  be up to 5% of your home price, and include things like inspection fees, appraisal fees, survey fees, and settlement fees. The good news is, closing costs are very negotiable. A good lending agency will uncover any unnecessary costs and help you bargain with the seller. In some cases, you can even avoid paying for closing costs upfront by adding them into your mortgage payment or increasing your interest rate.

Ready to take the next step? Request a free consultation today »

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