Mortgage Application Process
Your M.A.P. from Application to Ownership
Whether you’re planning to move to a new place or looking to purchase your first home, you’ll need to pay for it! The obvious first step is to apply for a loan. But what happens after that? Read on for your loan MAP, a step-by-step, easy-to-understand guide through the mortgage loan application process.
Meet with a trusted mortgage loan professional. You’ll need to gather and provide a few items. Among other things, this typically includes pay statements, W-2’s, tax returns, bank statements, and asset statements, such as stocks, IRA’s, and 401k.
If all goes well, you will be pre-approved by a lender for a certain amount of money. You will receive a letter stating such, which assures sellers that they can confidently accept an offer from you.
STEP 3 – FIND YOUR DREAM HOME
This is the fun part. Time to look for your new home. With your pre-approval letter in hand, you’re ready to make an offer.
STEP 4 – HOME INSPECTION
You’ll want to make sure there are no unseen problems with the house you plan to purchase, so it’s time to find a reputable home inspector to find out.
STEP 5 – LOCK IN A RATE
You should discuss a rate lock with your loan officer. An interest rate lock can protect you from fluctuations in the rate on your loan while the remaining steps in the loan process take place.
STEP 6 – NEGOTIATE REPAIRS
The home inspection will bring to light any repairs that should be taken care of for the home to be in tip-top shape before you take ownership. Through your agents, you and the seller will negotiate who will be responsible for these repairs.
STEP 7 – APPRAISAL
Your loan officer will order the appraisal. Since you are borrowing the money to purchase the home, the lender wants to know that it is actually worth the amount you are planning to pay for it. A certified and licensed home appraiser will determine the home’s worth, and the loan officer will review the appraisal.
STEP 8 – HOMEOWNER’S INSURANCE
The lender requires that you have homeowner’s insurance on the new property. This insurance will cover damage to the property as well as liability for any injuries that may occur in your new home. You’ll need to contact a homeowner’s insurance agent to get a premium quote.
STEP 9 – MISSING ITEMS?
The loan officer and processor will check to see if any items are missing that may be needed for final approval on the loan.
STEP 10 – FINAL REVIEW & APPROVAL
Now your fate is in the hands of an important stranger you will never meet…the underwriter. This person reviews the numbers and paperwork, and gives final approval on the loan if everything is in good order. The loan officer will order documents and send them to the title company.
STEP 11 – TITLE COMPANY
A title shows ownership of the property. A title company is responsible for making sure that the title is legitimate and issues title insurance. This insurance will protect you and the lender if there is ever a dispute over who owns the home. The title company schedules the closing appointment.
STEP 12 – CLOSING
Prior to the closing appointment, “cash to close” is determined, which is the amount of money you’ll need to provide to close the deal. It includes closing costs, your down payment, and any escrows for homeowner’s insurance and property taxes. Bring this amount in the form of a cashier’s check, and be prepared to sign many documents.
STEP 13 – CELEBRATE!
After closing, the loan funds and gets recorded, and you are a new homeowner. Congratulations!
By Dawn Wooden
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