Are you thinking of going in for a mortgage loan?
You aren’t alone. The vast majority of American homeowners are still paying their mortgages today. Taking out a mortgage is the only way for many Americans to afford buying a home.
However, if this is your first time applying for a home loan, you might be wondering what the process is like. Is it similar to the process of applying for a traditional personal loan or an auto loan?
The mortgage loan process is multi-step and can be tiring. You need to know what you’re getting into before you even get started.
Read on for deeper insight.
Finding a Suitable Lender
You don’t just walk into any bank and ask to apply for a mortgage. This is because not all lenders offer home loans and among those that do, you want to find one with the most favorable loan terms.
As such, the mortgage loan process starts with finding the right lender for your needs. Go online and research the various home loans offered by top lenders like Loanpal. Keep an eye on types of mortgages offered, interest rate, loan length, deposit requirements, and loan fees.
If you don’t want to go through the hassle of finding a lender on your own, you’re free to hire a mortgage broker to help you. This will take a few days.
You’ve identified a suitable lender. The next step is to submit your home loan application for pre-approval.
Since mortgages are big loans, lenders incur a big risk when they lend. To minimize this risk, they’re always trying to ensure only qualified applicants get approved. Even then, approval isn’t a quick decision. It’s a pre-approval that comes first.
Being pre-approved means the lender has scrutinized your credit and income history and established that you meet their minimum requirements. You’ll also get the know the amount of money the lender might be willing to lend you.
Pre-approval timeframes vary from lender to lender, but you should have feedback within 5 business days.
Armed with a mortgage pre-approval, you’re ready to start shopping for homes that suit your mortgage.
This is to say, if your pre-approval indicates you can get up to $500,000, the homes you shop for should be in this range. If you go higher, you must be willing to top up the balance out of pocket.
After finding the home of your choice, it’s time to make a purchase offer.
Loan Application, Processing, Approval, and Closing
Finally, you’re ready to apply for a mortgage. You can go back to the lender that pre-approved you (highly recommended) or choose another lender, but this can take more time to get a decision.
Your lender will make a loan decision after reviewing all the necessary personal and house documents. The decision can take two weeks or even longer.
Once your mortgage application is approved, it’s time for closing. This basically involves completing the transaction with all the parties involved. Soon after you’ll be a happy homeowner.
The Mortgage Loan Process in a Nutshell
The mortgage loan process is long, but we’ve fleshed out what it looks like in a nutshell. To avoid unnecessary challenges along the way, it’s best to work with professionals, such as a mortgage broker, real estate agent, and a closing attorney.
All the best and don’t forget to bookmark our blog and come back often for fresh content.