Navigating the home loan process can feel intimidating—mountains of paperwork, time horizons measured in decades, and hundreds of thousands of dollars on the hook.
Deep breaths! You got this. Neither the lender nor your partners at AWay Home Loans will let you get in over your head. The process is actually very approachable when you break it down into manageable steps.
WHAT THE MORTGAGE LOAN PROCESS LOOKS LIKE
Pre-approval doesn’t guarantee that you will get a loan at the end of the process, but it certainly is a good first look at your eligibility. With a preliminary credit and income check, you can find out how large of a loan balance you are eligible for, and by extension “how much house you can afford.”
Now that you know your budget, start house-hunting! This is the fun part—where you get to take your pre-approval out for a spin and let your imagination run wild on the houses currently on the market—houses that you soon might call “home!”
Mortgage Loan Application
Once you make an offer on the house and the offer is accepted, it’s time to apply for the loan! Depending on the loan program, there may be application fees to consider.
While you don’t exercise much control over the loan processing stage, knowing what happens during that stage can help demystify it. Stages of loan processing include:
Underwriting is a mysterious process to many people, but it is actually simpler than it looks. “Underwriting” is a risk analysis. Lenders take off a certain level of risk, and the underwriter’s job is to assess the level of risk a particular transaction would incur. A high credit score might indicate lower risk; a low down payment from the borrower might indicate higher risk.
Ready to do the deal? Once the transaction passes underwriting, a closing meeting is scheduled.
TYPES OF LOANS
When you get a mortgage loan, there are many features to consider. Adjustable and fixed-rate loans have pros and cons and there are many factors that play a role in the decision.
These loans are backed by the government to guarantee repayment to the bank, should you default on your mortgage payment. The 3 types are FHA, VA, and USDA loans.
These loans are used to finance homes that are too expensive. Jumbo loans have stricter qualification rules, as well as a higher down payment.