Whether you’re purchasing a house to live in or profit, the mortgage process can be a bit daunting, especially if you’re a first-time buyer or haven’t done so in many years. Fortunately, it is a process that requires certain things, which can guide you. Keep reading to learn how the mortgage process works and get tips to use along the way to make it go more smoothly!
1: What Pre-Approval Is
Being pre-approved for a mortgage isn’t important simply because it lets you know if you can buy. It informs you of your budget, which may impact the type, number, and location of properties you consider. For example, you might focus on more affordable foreclosures with shorter sale times. Pre-qualification differs from preapproval because it’s an estimate based on a few factors, not a firm offer tailored to you. Pre-approval is the lender’s offer to you to provide a mortgage.
Mortgage calculators can help determine your monthly payments based on the amount, duration, and rate of the mortgage, which you may find useful when determining your budget. Sometimes, you may want to reconsider buying a house until you have a bigger downpayment or higher salary, which may increase your pre-approval amount and the terms, including the interest rate and payment amounts, of your mortgage. You may also want to shop around for a different lender to find the best offer. However, if you’re ready to offer, have the letter ready to give to the seller or agent.
To minimize the time, effort, and potential stress of shopping for a home, know what you must have and what you want but will give up for other perks, such as a good location or lower cost. Keep this list in mind when browsing for homes online and visiting them in person. You will also provide these details to your real estate agent, if using one, to help find the home for you. However, you might be glad you gave a house a chance even if it didn’t have one of your “must-haves”.
2: How an Agent Helps
Your real estate agent is your best friend when putting in an offer. They understand the terminology and process. Expect to supply your downpayment when you make an offer, even if it’s not accepted. A higher offer typically increases your chance of acceptance, although you may be able to negotiate fees or even sway the seller with a personal appeal. Once that offer is accepted, you must be ready to pay.
3: How Much Paperwork is Involved
Your lender will require signatures on various documents during the underwriting process. You can request a checklist of paperwork if you find it helpful, but not all borrowers are lucky enough to receive one. Even if you’re already signing paperwork, you could still experience some surprises. For example, if your employer is based elsewhere, your lender might want proof that your work is fully remote, or your CPA may be required to provide a letter stating that you can maintain your job and income.
