The Mortgage Process
You may have heard from friends and family members that getting approved for a mortgage is a tedious, tiresome task. The fact is that applying for a mortgage does require a lot of work, and you must be ready to present a significant amount of information to prove to your lender that you are trustworthy enough to be eligible for their financial product. The recent mortgage crisis has made lenders a bit gun-shy, so they are likely to ask for more information than they have in the past. This means that if you purchased a house in the late 1990s or early 2000s, the process might have changed a bit. Let's talk about the various phases of securing your mortgage loan.
Start at the Beginning!
Before you even start applying for a mortgage loan with Tucker Mortgage, you will need to go through the pre-approval process. During this stage, you will be required to dig up various bits of information for your Loan Officer to consider. These generally include basic items such as your credit report, most recent income tax documents, pay stubs and proof of your holdings and investments. Your loan is not "live" at this point -- rather, your Loan Officer is simply providing an estimate that will allow you to begin pricing your home options.
When you are applying for a loan pre-approval, it is important to know that the lender will first evaluate the "four C's" to determine whether you should receive a loan. First, your capacity to make payments will be evaluated. That is, you must have a reliable income, and your ability to make payments should not be compromised by any forseeable future actions. Credit history plays a big role, as well; borrowers want to know about your history of paying bills on time. The capital or cash reserves in your bank account are also considered. Those consist of the money, assets and investments that could be sold for cash in case you default. Finally, collateral, or the type of property you intend to purchase, must also weigh in the decision.
Know what a lender is looking for, and you are far more likely to submit a successful loan application. Now, you can go shopping! With your pre-approved information in hand, you are able to make an offer on a house that falls within your budget. A pre-approval helps you shop with confidence because you know you will probably be able to afford a home that falls below the lending limit.
You Have Found Your House: Now What?
So, you want to make an offer! Now, the full application will begin. Your Loan Officer will make sure that all of your information is up-to-date, especially if 90 days have passed since you were pre-qualified. You will complete your formal loan application, which is generally referred to as the Uniform Residential Loan Application. This is a lengthy process that includes personal information, detailed accountings of your assets and liabilities and employment information.
Borrowers will provide lenders with the address of the home they intend to purchase, along with any relevant details about the property. The lender is then tasked with having the house formally appraised to determine the property's value. It is important to get an accurate market value for the home, as that amount will be considered collateral of your loan. Borrowers are encouraged to get a copy of the appraisal for their personal records. The lender will then issue a Commitment Letter that serves as your final proof that you are approved for the mortgage. After this, you will be ready to go through the closing process.
Before we get to that, though, it is important to note that several people will be reviewing your loan application to make sure that it is legally approved and processed. After you fill out your official application, a Mortgage Processor will be responsible for obtaining the appraisal and examining the home's title. The Mortgage Processor makes sure that the Loan Officer did not miss any essential documentation. Then, the application goes to the underwriter, who ensures that no one involved in the sale has a history of fradulent activity. This protects both the buyer and the seller, along with their attorneys and the appraiser. Then, the loan is underwritten using standards established by federal and local regulators.
Get Ready to Close!
When you have the Commitment Letter in hand, it is time to close on the purchase of your home. You may need to bring money to the closing, which is essentially the final step in purchasing your home. When you arrive for the closing, you must bring the mortgage note and the mortgage or deed of trust. Those documents provide evidence that you have been approved for the loan, and they also give the lender the right to seize the property through foreclosure if you fail to make payments. Additional affidavits may also be required to demonstrate that the home will be your residence, for example. Make sure you talk to your Tucker Mortgage representative to ensure that you have all of the proper documentation when you go into the closing meeting.
During the closing, you need to make sure you read and understand all of the documents that have been sent to you, either with a real estate agent or a financial professional. You may even ask your adviser to go over the documents with you in detail before you close just to make sure you are prepared to sign the formal documents. Experts encourage homebuyers to ask questions, even if they have been through the process in the past.
Closing is a detailed process that requires just as much vigilance as shopping for your home! Your mortgage lender can walk you through the detailed steps of obtaining a mortgage, from the initial pre-approval paperwork all the way through your closing meeting.
Resources
You can rely on your Tucker Mortgage team to help you get the best mortgage for your personal needs and financial situation. Tucker Mortgage is a unique online source that allows potential homebuyers to review loan options and even apply for a loan at any time, day or night! Just because we are online does not mean we are less relaible; Tucker is a full-service lender that has a highly qualified staff supporting all of our mortgage applicants. We are committed to finding the perfect loan for every one of our clients. You deserve to be a homeowner, and Tucker Mortgage can help! Why wait to start your pre-approval process? Check out the resources and application documents available right here through our website, and take your first step toward buying a home.