Applying for a Mortgage (Important Info + 6 Steps)

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Buying a house can be stressful. For first-time homebuyers especially, there is a lot of uncertainty around applying for a mortgage.

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That is why preparing for and understanding the process can decrease some of the stress of applying for a mortgage.

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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.

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With an adjustable-rate mortgage, your rate starts lower than a fixed rate. It then adjusts based on a predetermined index.

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Adjustable loans have their downsides too. One major downside is that you will still have to make higher payments if the rate adjusts, even if you pay down the loan.

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You might have heard the terms conventional mortgage or conforming mortgage. These terms refer to mortgages that lenders can issue, then package up and sell to another company.

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For those lenders to sell them to a secondary market for the best rate, they must conform to Freddie Mac or Fannie Mae standards, such as your loan percentage of the overall home value.

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These types of loans are notorious for needing more documentation or re-sending updated files as the mortgage goes through underwriting.

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Applying for a Mortgage: 6 Steps 1. Pre-approval 2. Getting property under contract 3. Application 4. Underwriting 5. Commitment 6. Closing

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