Mortgage loan – Steps to purchase your home

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Wondering what steps in acquiring a mortgage loan for purchase? Here are practical steps to help you on your journey:

  1. Submit an application. When submitting your application, prepare all your financial documents, employment history, and financial situation, among others. Applying will require you to submit a lot of information, so be sure you have everything on hand. Lenders ask you all these questions because they want to know if you will qualify for the loan that you are applying for or not.
  2. Order a Home Inspection.  Imagine, to an untrained eye, molds, faulty wirings, and other significant issues can be avoided if you have the home inspected before purchasing it. Inspectors will look at the current plumbing, roofing, electrical, foundation, and HVAC (Heating, Ventilation, and Air Conditioning) issues of the home you want to buy.
  3. Purchase Home Insurance. This is a necessity you cannot live without. Purchasing home insurance will protect your home against theft and damages and give you coverage for the fair value of the property. Mortgage companies will require you to have this before you get approved for a loan. When shopping for home insurance, make sure to compare quotes from three-five companies before deciding which one is best for you.
  4. Avoid taking new credit. Lenders want to be sure that you can pay your monthly mortgage, and they will be looking not only at your credit history but also your capacity to pay at the moment. If you have a history of late payments and debt collection demands in the past, you can get higher interest rates and lesser than favorable loan terms, or even loan denial.  To avoid this, pay on time and increase your capacity to pay.
  5. Lock in your rate. From the time you apply for the loan until closing, the rate remains even if the market changes. Changes like the borrower’s credit score and loan amount can change your rate, but if nothing in the application changes, you are guaranteed your lock-in rate for the next 30-60 days or until you close. Rate locks will allow the borrower to get the lower rate if the market changes but will still protect you from rate increases.
  6. Review your documents. You will are given three days to review your documents, and you can request a copy of the closing documents in advance. You need to check the promissory note, mortgage or deed of trust, and the Deed. You may want to talk to your advisor or seek help from a real estate attorney to help you understand the legalities of your document. Do not be afraid to keep on asking questions until you get the answer that satisfies you.
  7. Arrange to pay for the down payment and closing costs. Bear in mind that the higher your down payment, the lesser you will need to borrow to finance your house. With your more significant down payment, you will also have a lower monthly payment, and it will save you money in paying for your loan interest. Depending on the kind of loan, you can have zero to as high as 30%, or even more, in down payment.
  8. Close on your home. Now that you have completed the paperwork, read all the documents and understood every word of it, make sure you go and have one last visit to the property to ensure there is no damage and everything is in order.  Check out that the financial figures are according to what has been agreed on.

After all these steps, it is not time for closing day to arrive. Funds will be transferred from escrow, payments made for title fees, papers are signed, and the house’s deed is transferred to your name! Let us know if you need help as you go through the process, however long and tedious it might be, and before you know it, the house is finally yours!