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How Do You Get a Mortgage?

If you’re ready to take the exciting step of becoming a homeowner, we’re here to help. Navigating the process of purchasing a home can feel overwhelming at first, but with the right information and guidance, you can make informed decisions every step of the way. Whether you’re a first-time buyer or looking to upgrade to your dream home, we’re here to provide you with valuable insights, tips, and resources to help you successfully navigate the journey of buying a house and securing a mortgage. Let’s dive in and explore the key steps and considerations involved in the home-buying process!

First Things First…Talk to a Lender

Before you do anything, you’ll want to talk to a lender to discuss your budget and how much house you can afford. Starting with a lender helps avoid the agony of falling in love with a home on Zillow or Redfin only to find out it’s out of your budget. Most Realtors will also refer you to a lender before you start looking at homes to get pre-approved. Sometimes, you don’t even know what is possible before you have a conversation with a lender, so we recommend starting there! 

Pre-Approval 

When you contact a lender, they will begin the pre-approval process. The first part of that process is discussing loan programs and options that will work best for you and your situation. We do pre-approvals over the phone, in person, online, or via email! Personally, we prefer and recommend in-person appointments because we know things can get a bit confusing or overwhelming if you’re new to the process. This way, we can ensure you leave our office totally comfortable with the information you were given!

During the pre-approval process we discuss: your qualification range, down payment requirement (if any), grant availability, credit score, etc.. 

So, what exactly does your lender need to know? First, your credit score is an important piece to mortgage qualification. Most loan programs require at least a 640 credit score, but every lender and every loan program has different requirements. Don’t fear the credit report process! Let us guide you along the way. There are often helpful tips we can provide regarding ways to improve your score.

Your lender will also review your income and debt to calculate what’s called a “debt-to-income” (DTI) ratio. DTI ratio limits vary with loan programs and lenders, so we do not recommend calculating this on your own.

Your idea of income may vary from a lender’s perspective. Overtime, bonus income, hours worked per week, etc., are all parts of your income that are considered by your lender. Lenders typically require two years of steady income, though some programs only require 12 months. Education does count towards the 12-to-24-month history. A lender should always request income verification before issuance of a pre-approval letter to confirm your eligibility for a mortgage.

Documentation is a key component of the mortgage process! 

Your lender will require:

  • paycheck stubs
  • 2 years W2s
  • federal tax returns
  • bank statements
  • photo ID
  • divorce decree/stipulations (if applicable)
  • DD214 (if Veteran) and child care expenses (if Veteran)

Providing your lender’s requested documentation promptly is the key to an accurate and quick pre-approval process.

Time To House Hunt! 

Once you have your pre-approval letter, it’s time to start hunting for the perfect house! If you haven’t already gotten a Realtor by this stage, now is the time to get one and lean on them throughout this process. Your lender will also be available for any questions you might have during this stage regarding monthly payments, etc. Your lender will have given your pre-approval letter to your Realtor so they are aware of your purchase qualification. Your Realtor will present your pre-approval letter with your offer to purchase once you’ve found the perfect house, so the sellers know you are qualified to purchase the home. That’s why having a thorough and sound pre-approval letter is so important! 

Accepted Offer

Once you have a fully executed Purchase Agreement, your lender will receive a copy from your Realtor, and this starts the full Loan Approval process. Documentation may need to be updated from the time of pre-approval as all documentation has expiration dates that vary with your closing date. Don’t worry because your lender will tell you everything that is needed and will stay in close communication with you during this process. 

Your lender will also have documentation for you to sign in this step, including your official loan estimate, and If you are within 60 days of closing, your lender will lock in your interest rate as well. This can all be done in person or electronically, but if you didn’t get the chance to meet in person with your lender during the pre-approval process, we still think it’s worth it to meet in person at least once before your closing day! If nothing else, just to make sure all your questions are answered and you don’t have any confusion throughout this process. Purchasing a home is and should be exciting, not confusing! 

Loan Processing

Once your initial disclosures are signed in step three, we move on to the next step– Loan Processing! The appraisal is ordered, filed, and checked by Loan Analysts for any further documentation needed. The appraisal typically takes about two weeks to get back to the lender once ordered. As soon as it is back, you and your Realtor are notified!

Underwriting 

Then, the process moves on to the Underwriting stage—which means the Underwriter reviews all the paperwork to approve the loan. It’s always best to work with a lender who has in-house underwriting—like RMN! This means your file doesn’t go anywhere, and your dates for loan approval are very closely watched so that the agreed-upon deadline in your purchase agreement is met. If the lender you are working with is a broker or is sending the file out for underwriting, it can add days or weeks to the process! We can get your loan closed in 30 days or less, and we’ve even gotten it done in as little as 2 weeks when we have to. If we have a question, or our underwriter has a question, we just walk a few steps down the hall to their office and get the problem squared away in real time! 

Loan Approval

As soon as the Underwriter is done and the loan is approved, you and your Realtor are once again notified. This also starts the process for Closing, as it’s usually only a week or so after Loan Approval in RMN’s normal 30-day window from accepted offer to closing. There is typically nothing more for you to do, as the buyer, but wait for Closing Day. This step focuses on title work and getting the final numbers buttoned up with the seller’s side. You will get a Closing Disclosure at least three days before Closing to review. Your Loan Officer will go over the Closing Disclosure with you again at Closing. Be careful not to open up any new lines of credit, quit your job, or make any other financially impacting life decisions before Closing Day! 

Closing Day!

Woohoo!! Finally, Closing Day! Closing typically happens at your lender’s office and is when the property is given to your possession—and is usually done in person. During Closing, your Loan Officer will go through the many documents you will be signing and what each document entails. After Closing is complete and your documents have been signed, keys to your new home are handed off to you to begin the moving process! Congratulations, you purchased a home!

From start to finish, the process of obtaining a mortgage and purchasing a home is MUCH smoother when you have an amazing, experienced lender on your side. We are here to help, and we love getting our clients to the closing table as seamlessly as possible. If you have any questions—ask!