A Step-By-Step Guide on How to Apply For a Mortgage Loan
Are you considering purchasing a home and need to apply for a mortgage loan? Though the process can seem intimidating, it’s really quite straightforward if you know what to expect.
First and foremost, you will need to know which documents to submit during the application process. Your lender may ask for various paperwork such as tax returns, bank statements, pay stubs and W-2 forms in order to assess your creditworthiness, income level and debt-to-income ratio. With this data they can determine your debt-to-income ratio and other important details about you.
Prepare all necessary documents in advance so you can expedite the mortgage application process when it comes time. Furthermore, start saving for a down payment and closing costs which must be covered before closing on your home purchase.
Once you have all of the required information, you can apply either online or over the phone. A loan officer will guide you through each section and offer feedback as you go along. Alternatively, if applying online is chosen, lenders typically provide you with a loan estimate within three business days that includes details on interest rate, loan amount, closing costs and other associated costs.
Lenders consider several factors when deciding whether or not to offer you a loan, such as your income, employment history, credit score, debt-to-income ratio, assets and the type of property you wish to purchase. Although these criteria differ between lenders, they all help assess your viability as an applicant.
Once you meet their criteria, your mortgage application will be forwarded to an underwriter. They’ll review your information to verify it’s accurate and complete as well as verifying your assets and debts are legitimate.
Once the underwriter issues a final approval on your mortgage application, you can sign it and close on your home to become the proud new homeowner!
Once the underwriter has approved your mortgage, you will be given a Closing Disclosure and copy of your Mortgage Agreement. Be sure to bring these items with you to the closing meeting; unless it’s for a reverse mortgage, also bring along your social security number, ID card and down payment.
In most cases, your loan will be processed and closed within 45 days. With such a lengthy timeline, it’s essential to plan ahead of time.
Before beginning your mortgage application, ensure your credit report is clear and free of errors. You are entitled to a free copy of your credit report every 12 months; however, it’s wise to check it regularly in order to eliminate inaccurate information or outdated records.
When applying for a mortgage, it’s wise to submit multiple applications to various lenders in order to compare offers and find the best deal on a home loan. Each lender must provide you with a loan estimate within three days of receiving your application; use this document to negotiate interest rate and closing costs.