Mortgage Process
Getting a mortgage can be a complex, daunting task. There is a wide range of mortgages to
choose from, you will need to gather a lot of documents to apply for them, and even working out the monthly cost of your future mortgage can be difficult.
Nevertheless, the mortgage process can be broken into a number of well-defined steps. Most people go through six distinct stages when they are looking for a new mortgage: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing.
In this guide, we’ll explain everything you need to know about each of these steps.
KEY TAKEAWAYS
-
The mortgage process can be complicated but can be broken into a number of steps: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing.
-
It’s a good idea to get pre-approval for a mortgage before you start looking for a property, so you know what you can afford.
-
Once you’ve found a property and put in an offer, expect the mortgage closing process to take up to 45 days to complete.
-
Check all of your paperwork carefully. You will be paying for your mortgage for a long time, so the small print can end up costing you a lot of money.
1. Get Your Pre-Approval
The first step in getting a mortgage is to work out what kind of mortgage is best for you, how much you can afford to pay, and to obtain pre-approval for this loan. In order to find the right type of mortgage, familiarize yourself with the different types of mortgages and find the one that is right for you. You’ll need to take into account a number of factors when it comes to choosing a mortgage, but the most important is to have an accurate idea of your monthly costs. This will include not just paying back the “principal” loan, but also interest payments. And if you aren’t able to make a 20% down payment on a property, you’ll also need to pay for private mortgage insurance (PMI).1 A mortgage calculator can show you the impact of different rates on your monthly payment.
Once you have an idea of the type of mortgage you would like, you can approach mortgage lenders for pre-approval. A pre-approval is a document that states the maximum amount your mortgage lender is willing to loan to you. You can get pre-approved quite quickly—your mortgage lender will just need to run a three-bureau credit report (called a tri-merge) that shows your credit score and credit history as reported by third-party credit bureaus.
A pre-approval is valuable when it comes to looking for a property. It indicates you are a serious buyer and means that you are ready to move quickly on a property when you find one you love.
