Applying for a Mortgage (Important Info + 6 Steps)

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.

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

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.

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.

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.

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

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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