Buying a house can be stressful. For first-time homebuyers especially, there is a lot of uncertainty around applying for a mortgage. That is why preparing for and understanding the process can decrease some of the stress of applying for a mortgage.
There are many reasons why as a borrower, you would want to apply for a mortgage. The most obvious is that you cannot afford to buy the house in cash and need to make installment payments on it over the next 15 to 30 years.
The pre-approval stage of getting a mortgage is typically relatively pain-free. First, a loan officer will ask you some questions and get basic verification of your income and credit score.
During the pre-approval, the loan officer will tell you the total loan amount you will qualify for.
Getting a property under contract is a prerequisite to moving forward with the lending process because the bank will need to consider the property you are buying. So after you’ve found a home, made an offer that both parties have agreed to, you can move to the next step in applying for a mortgage.
Filling out this form will probably take about 1-3 hours, depending on how organized you are and if you have all the information needed in front of you. For example, if it is your first property and you do not have many loans, bank accounts, or brokerage accounts to mention in the application, it should not take too long.
Most people do not like going through the underwriting phase. This phase is where the loan officer takes your completed application package with all the documentation and delivers it to an underwriter for review.
Once the loan is underwritten and the lender has gone through their checklist of requirements for the loan to their satisfaction, they issue a loan commitment.
Some lenders wait for the appraisal to be completed before starting the underwriting process. Some of them do all the underwriting except the portion affected by the appraisal ahead of time and then wait for it to come in before giving the clear to close.
Getting to the closing table can be an exciting and nerve-racking time for a buyer. But, buying a house is a big deal, so that is understandable. Celebrate. You’ve successfully applied for a mortgage and are about to complete the process.