You can probably imagine yourself moving into your new home already. But not so fast. There are several things you have to do first. The home buying process involves more than just looking for a piece of property you want to live in and settling your payment. This big feat is a complex one that involves paperwork and technicalities.
Unless you’ve spent the last couple of years saving up for the total cost of your new home, you will need a mortgage. The loan obtained will help fund the principal cost of the house, while you settle the loan in arrears within a specified time frame. Sounds easy enough, but the mortgage process can get overwhelming, especially for first-time homebuyers. Here’s a quick guide to help you navigate through it.
Do your research
Before you start reaching out to potential lenders, you have to do your research. There are several institutions offering mortgage loans, but not all of them will be suitable for you. Loans have different terms, interest rates, periods, etc. Hence, you need to be careful with where you send your applications to.
Look for mortgage lenders in your area and learn as much about them as you can. Review their available loan options and find one that is best for you. In doing this, take into consideration your financial capabilities, budget, etc.
Compare loan estimates
Lenders are required by law to give potential borrowers a loan estimate. This document consists of a detailed breakdown of all the costs and expenses involved in the loan. Your job, as a homebuyer, is to retrieve loan estimates from several lenders. Compare and contrast the loan options, terms, costs, interest rates, etc. Reviewing loan estimates will help you make an informed decision on which institution to choose.
Submit your application
Once you’ve selected the ideal lender for you, you submit your loan application. Usually, the application form contains at least five pages of questions regarding your financial status, debts, assets, income source, and the property. Be prepared with the essential financial information, so you can fill up your form quickly and accurately.
Stay put for loan processing
Every piece of information you provided in the application form will need to be verified. Lenders do this to protect their interests. Processing usually takes up to two to three weeks. The only thing you can do during this period is to stay put. But also, be prepared to answer any clarifications or questions they may have about the information you provided.
Review the closing disclosure
When the lender congratulates you on your loan approval, don’t get too excited about it. Most homebuyers make the mistake of immediately taking action on the approved mortgage. Take some time to review the closing disclosure.
Crunch the numbers and compare them with those in the loan estimates. If anything has changed or there is any inconsistency, don’t be afraid to ask for clarification. The lender should explain any change in the quoted fees.
Sign the paperwork
When you decide to push through, and you’ve given the lender your go signal, you have to take on the paperwork. There’s a whole stack of contracts, agreements, and documents waiting for you to sign. Make sure to review them and read through each page diligently before jotting down your signature.
Congratulations! You have successfully obtained a mortgage loan. Now it’s time to negotiate with the home seller and obtain your dream house.
