As the mortgage process left your brain feeling a little fuzzy to help clear up the fuzz around mortgages, we’ve simplified the process to eight easy steps. Learn these and you can focus less on your mortgage and more on your dream home.
Step one: Application. Fill out a 1003 mortgage application. Your loan officer looks at your character or your willingness to pay back the loan capacity. Your ability to pay back the loan and collateral your security against the loan to determine the loans feasibility.
Step two: Credit report. Your loan officer runs your credit report with the three major credit bureaus using the middle score and throwing out the high and low scores.
Step 3: Loan program. Your loan officer will review with you all available loan programs and help you to decide what is best for your situation. Programs include conventional Federal Housing Administration, Tennessee Housing Development Agency, Veterans Affairs US Department of Agriculture and jumbo loans. Check out this loan scenario to see how these pieces fit together.
Say you want to buy a home and need a loan for $150,000. you’re receiving your credit report back and it was a 680. after reviewing your options you decided to go with an FHA loan program, and a 30-year fixed-rate.
Your par rate is 3.75 percent which would make your monthly payment which is principal and interest 694 dollars and 67 cents. sometimes it might be better for you to increase your part rate,for example you can increase your rate from 3.75 percent to 4 percent to make your monthly payments 716 dollars and 12 cents.
Why do that you’ll be paying an additional 21 dollars and 45 cents per month but you’re trading that extra cost to receive $1,500 to put toward closing costs. it takes 5 years and 10 months to recoup one foot. If you think you might move in under six years it makes financial sense to increase your rate.
Use the 1500 toward closing and save your money for expenses like a lawn mower or however as you continue to pay the high monthly payment past five years and ten months. it’s not quite as good a deal, over the life of the loan the higher rate will cost an additional seven thousand seven hundred and twenty-two dollars an interest, but remember as of now the interest is tax deductible.
This process can be reversed as well you can pay money upfront to decrease your rate.this reduces your monthly payment.once you find your home and work through your own scenario by plugging in your actual numbers you can move on to the next step.
Step 4 for documentation. You will need to provide identification bank statements paycheck stubs w-2s tax returns and more depending on the loan situation.
Step 5: Processing processors will verify your documentation
Step 6: Underwriting. Underwriters may seem like wizards but really they just verify that your loan meets all loan program guidelines and may ask for additional documentation as needed.
Step 7: Approval and setting a closing date.
Step 8: Closing day. This takes place at a title company or Attorney’s Office. you will sign closing documents. these include the note for the buyers promise to pay back the loan and the deed of trust confirming that if the buyer does not follow through on the terms of the loan, the lender can foreclose.
So there you have it eight simple steps brain feeling less fuzzy guarantee trust has been helping home buyers like you clear the fuzz away from this process since 1986. It’s important that you’re able to make an educated decision when it comes to your mortgage.
One of the biggest financial investments of your life with the help of our experienced loan officers, you will have the peace of mind knowing you chose the right loan program and got the best rate for you.
When you call don’t expect to eat an answering service, instead our receptionist will connect you to the right person. Get the hometown service you deserve from a nationally recognized company, guarantee trust your home loan excellence you