Steps to Obtain a Mortgage

Steps to Obtain a Mortgage

Today’s stricter lending environment means that processing a mortgage application is more complex than ever. Given the number of steps that lenders, underwriters, and mortgage insurers must all complete before home buyers truly have their financing in place, the buyer can often feel exhausted and frustrated during the process.

To help ensure the process goes smoother, you can also take steps of your own. It’s a good idea to discuss the process with your Accredited Buyer’s Representative (ABR®), even before shopping for homes. By planning ahead, you’ll be in a much better position to negotiate.
Step 1: Get Pre-Approved
The only way to truly know how much home you can afford is to ask a lender. You should be prepared to complete a loan application and give full documentation shortly after your consult. Show your lender that you are serious about working in partnership with them by submitting all the required documentation as quickly as possible.

Getting pre-approved lets you know how much you can afford before shopping for your home. Some industry-leading lenders, like Movement Mortgage, underwrite a majority of the loan prior to giving pre-approval. By eliminating as many lending contingencies as possible, they ensure Buyers will be in the strongest negotiating position available.

What to Know and Where to Find It
• Income: Stable income assures a lender you can make your monthly mortgage payment.
• Total Debt Load: Add up auto payments, credit card payments, student loans, alimony, child support, and other debt.
• Cash: Total assets, amount in checking and savings accounts, and other investments.

Step 2: Determine Monthly Mortgage Payment Including Escrow
Escrow is a third party account used to retain funds including the property owner’s real estate taxes and hazard insurance premiums.

Step 3: Understand Bills Associated with Homeownership
Estimate that it will cost about one percent of the purchase price per year to maintain your home. For a $200,000 home, you should budget approximately $2,000 per year or approximately $170 per month for maintenance. Condominiums and co-ops will have regular maintenance fees. You will also have utilities, gas, electric, water, sewage, cable, telephone, insurance, property tax, etc.

Step 4: Compare the Total Costs to Your Monthly Salary
Subtract the total in Step 3 from your monthly gross income.

Step 5: Test Those Numbers for 3 to 6 Months
• Set up a new bank account and make monthly deposits in an amount that represent the difference between what you pay now for rent and the amount you would be expected to pay if you move forward with a new home purchase.
• Subtract your current monthly rent from your Step 2 total and the balance should be what you deposit.
Use these steps to give you the clarity necessary to move forward with confidence into home ownership.

COMMIT TO A LENDER
Courtney recommends before you look at any homes to purchase, do your research and commit to working with one lender. It is important to know that at some point your lender will start incurring processing expenses on your behalf. Make sure you understand when your financial commitment starts.

Your ABR® can provide recommendations of local lenders based on past home buyers’ experiences if you don’t know of any in your area. It is wise to build your real estate support team in advance so that your path is clear to focus on which new home you will buy without distractions. Once you have a trusted Realtor and Lender in place you are ready to start looking at homes.

SELLER CONSIDERATIONS
Financing underpins any real estate transaction and this is why it is important to make sure any Buyer who submits an offer on your home is properly qualified. For more detail on what Sellers should be considering when evaluating the strength of an offer ask Courtney.

Following these steps will greatly improve your results in obtaining a mortgage. Count on your ABR® to provide more detailed information on the process and answer any questions you may have.

Courtney holds her ABR or Accredited Buyer Representative designation with the National Association of Realtors.

 

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