Do you know all the steps involved in applying for a house? The process begins long before you even find the property itself. The mortgage application process can seem daunting and confusing, but the more you prepare, the smoother your experience will be.
Here are the major parts of the process to know:
Know basic mortgage loan requirements
Mortgage loans have basic minimum requirements for you to qualify. Most of these criteria are financial factors, but things like property type also come into account. Some metrics a mortgage lender will consider before giving you a loan estimate are your debt to income ratio, credit score, income and assets.
Apply with multiple mortgage lenders
Many first-time homebuyers are unaware they have room to negotiate loan estimates. Lenders can be flexible about their rates and fees offered.
You can shop around and compare prices with other customers. In some cases, you may use it as a bargaining tool in order for a lender to lower your rates. Checking multiple mortgage rates helps you understand how much money you really qualify for.
Get mortgage preapproval before making an offer
Lenders examine your finances - bank statements, taxable return, salary stubs, credit and credit history - and determine the cost for a new home purchase. By obtaining a preapproval letter from a lender before making an offer or even beginning your home search, you can be certain you’ll have the financing you need.
Also, you’ll have a better idea of how much house you can afford, and a better chance your eventual offer is accepted by the seller.
Avoid taking on new debts
Mortgage underwriters will evaluate your credit report based on monthly payments of your debt and total income. If you have too many credit cards in one month to repay your loan, your credit score can take a hit - and the lender will notice. To avoid this situation, don’t apply for any credit cards, credit lines or loans while applying for a mortgage.
Other factors to consider
Lenders do not consider your lifestyle or your personal expenses when you apply for a loan, so be sure you include additional housekeeping costs into your financial plan. Interest rate and down payment amount are both major factors in determining the amount of your mortgage payments, but don’t forget to factor your other costs into a budget.
When you apply for a mortgage, you’ll likely be taking on the biggest financial debt of your life. It’s no small undertaking, but it is possible to choose the best loan for you. Keep these basics in mind to keep your process as simple as possible.
About the Author
Ryan Mandigo
Ryan Mandigo is an award-winning professional broker associate with Realty ONE Group Dockside. Originally a native of New Hampshire, his love of real estate began 30+ years ago while swinging a hammer on a framing crew. He has always had a strong passion for helping people, whether it be assisting a couple in purchasing their first home, finding a home that fits a growing family's needs, or downsizing for those with an empty nest. He strives to build strong personal and professional relationships with being a true believer in the power of positive thinking and always willing to lend a helping hand.
He is also a co-founder and board member of the Swing Fore the Kids organization. A local charity that is 100% nonprofit and their sole purpose is to help needy children and young adults within Horry County communities. He finds great satisfaction and pleasure in seeing how working hard for a great cause and raising funds can help others in need. He is also on the Board of Directors for the Waccamaw Youth Center in Conway, where their mission is to provide at-risk youth "A Place To Call Home"
When he is not working, he enjoys music, working around the home, spending time with family and friends, turning wrenches on vintage vehicles, getting some wind therapy on the Harley or chilling with their dogs.
Some quotes he lives by - "Do what you like and like what you do" - "You have to be odd to be number one" - "Dreams don't work unless you do" And one of his favorites. "Positive and enthusiastic thinking in all you do"
