Buying a Home - 5 Steps to Obtaining 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. To help ensure the process goes smoother, you should also take steps of your own. It’simportant to discuss the process with your buyer’s agent and get pre-approved for a home loan before shopping for homes. By planning ahead, you’ll be in a much better position to negotiate and move forward on a purchase—and avoid any unpleasant surprises regarding your mortgage.

 1. EVALUATE AFFORDABILITY

Lenders and mortgage insurers look at a variety of factors, but the two most important are your monthly mortgage payment and your total debt load, relative to your gross income. As a home buyer, it’s also important to consider additional expenses, beyond your mortgage payment, that can impact how much home you can afford. Depending on your situation, these other expenses could include property taxes, mortgage insurance, homeowners insurance, home maintenance expenses, homeowner association fees, parking expenses, and utilities.

 2. DISCUSS YOUR OPTIONS

Deciding what type of mortgage is best for you depends on your personal situation, your financial scenario, and your future plans. For example, if your down payment isn’t large enough to qualify for a conventional loan, an FHA mortgage can be an excellent option.

Your Pedersen Real Estate Realtor® can provide several recommendations, based on past home buyers’ experiences. Rates and fees are typically very competitive between lenders, so it’s often more important to focus on other factors, including the level of service provided and how well they’ve executed transactions for other buyers.

4. GET PREAPPROVED

Completing a loan application with one or more lenders will help confirm whether your intended mortgage financing plans will work out as hoped, or if you must modify your plans. It’s important to understand since pre-approvals are contingent upon the lender receiving full documentation; your pre-approval does not guarantee that you have a mortgage. Still, it’s an important first step that will also put you in a better position with sellers.

 5. COMMIT TO A LENDER  

As soon as you are under contract to purchase a home, commit to working with one lender to complete your mortgage application. You may be charged a fee at this point because this is when the lender starts incurring processing expenses on your behalf. Show your lender that you are serious about working in partnership with them by submitting all the required documentation as quickly as possible.

Following these five steps will greatly improve your results in getting a mortgage. Count on your Pedersen Real Estate Realtor ® to provide more detailed information on each step in the process and answer any questions you may have.

Information from National Association of Realtors® - Real Estate Buyer’s Agent Council  - REBAC

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