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Applying for a Mortgage: How to Get Started and Helpful Tips

How to Get Started When Applying for a Mortgage

If you’re reading this, you’ve probably decided to buy a home! After time spent searching and going to several open houses, you have finally found “the one” that you’re ready to commit to. However, an official bond between you and your desired home is another journey ahead. If you’ve chosen to obtain a mortgage, prepare for a demanding (and rewarding) process heading your way.

But let’s not dive into the specifics just yet. To obtain a mortgage, you and all other individuals that plan to be on the mortgage will need to accomplish the first step: apply!

A mortgage application isn’t your traditional application. Beyond the basics of your personal information and the details of the house you’re looking to purchase, applying for a mortgage requires hunting down the necessary documents and constantly communicating with your chosen mortgage lender. Here is our detailed overview on applying for a mortgage that will educate and prepare you for the rest of the process.

Wait, What is a Mortgage?

For those who are new to the world of real estate, you’ve either heard of the term or haven’t. As someone who is trying to apply for a mortgage, you should be fully aware of its definition and why people opt for it when buying a home.

A mortgage is a loan. More specifically, a home loan. With any other loan, if you are unable to pay for a product or service in full, an agreement is created between you and a lender that states you are borrowing money to make a purchase. This agreement gives the lender the right to take your property if you fail to repay the money you’ve borrowed.

With a mortgage, you are provided a loan by a lender that enables you to purchase a home of your choosing. Mortgages are highly common in the industry and “as of 2020, approximately 44% of U.S. consumers have a mortgage” (Experian, 2020).

Before Applying for a Mortgage

Before submitting an official mortgage application, we recommend doing some self-analysis on your financial situation and the house you wish to purchase. Take some time to think about these questions before applying:

Am I ready to buy a home? It’s no secret that homeownership is a huge commitment. If you’re on the edge of making this decision, we recommend reaching out to friends, family, or experienced individuals in the industry to get their take on it. Though everyone has their own reasons for buying a home, seeking outside advice and a different perspective will help you solidify your decision.

Is this the house I want? As most people would say, a house is one of the largest purchases you’ll make in your life. You, as the owner, will want to be confident in your choice of place. When looking for desirable homes, check out these top real estate apps or look for open houses in your area. Ideally, you may want to have options to choose from in case one of them suddenly falls through.

Can I afford the monthly payments? When you rent, the amount you pay each month includes most of the time, just rent. Sometimes, utilities will be included. Surprisingly, it is far different when you own. There are recurring costs and fees that compile into your monthly mortgage payment, making the final amount potentially more costly than you may have anticipated. To get a rough estimate of what your monthly mortgage payment will look like, punch in the details in our mortgage calculator and decide for yourself if it works for you.

Do I have any financial hiccups? Financial hiccups can be in the form of debt, a poor credit score, and other expenses that substantially affect your finances. That’s not to say you’re denied a mortgage for having debt, but thinking about your overall financial situation and possible expenses for long-term plans (marriage, kids, grad school, etc.) will paint the big picture of your life. Then, you can decide what has higher priority over others.

Asking yourselves these questions should offer some clarity and context around the value of buying a house. If any of these items raise a concern in your mind, we highly recommend you speak to one of our loan officers. Experienced loan officers have faced several home buying situations, so their sound advice will be extremely valuable no matter what your circumstances. Remember that the option to buy a home will always be available, even if now’s not the right time.

However, if you’ve gone through these questions while still feeling confident in your decision, right on! Let’s move on to the application.

What You’ll Need

Just as you were to rent, you are expected to provide documentation to verify your employment history, credit score, and overall financial situation. When applying for a mortgage, you’ll need the following items to submit to your mortgage lender:

  • Most recent 2 paystubs within a 30-day period
  • 2 years of personal and business tax returns
  • 2 years of W-2s
  • 2 months of recent bank statements
  • Copy of current mortgage statement (if you currently own)
  • Copy of homeowner’s insurance
  • Current HOA statement (if applicable)
  • Copy of driver’s license

In some circumstances, your lender may require additional documents or ask questions to confirm the details based on the information you submit. You may have to permit your lender to run a credit report for you as part of the application process. If this step concerns you due to your credit score possibly being in poor standing, read our beginner’s guide on credit repair to help improve and maintain your score.

Now that you have all your documentation ready, the application process is set to begin.

During the Application

Your mortgage lender will provide you with a loan application to submit your information. Most loan applications are now uniform, which makes it easier on both the lender and the client to streamline this process. With all the correct documentation ready in hand, this should be a walk in the park! Here are 4 friendly reminders when submitting your mortgage application:

1.     Complete everything

While this reminder is a given, be extra cautious when filling out your application. If you miss a few fields or forget to submit a required document, that adds more days into the entire process and brings you one step back toward your goal.

2.     Be accurate

In other words, be as transparent and authentic as possible. You can risk your mortgage not being approved if you fail to comply with honesty. No matter what drawbacks you may have, it’s better to risk getting a higher mortgage rate than not having a mortgage at all.

3.     Review carefully

When reviewing your application, look with a keen eye for any typos or misspellings. Your information is crucial to the mortgage process, so any kind of error can pose a greater concern.

4.     Be responsive

Even during the application process, your mortgage lender might need to contact you to get additional information or to confirm any vague details. Time is of the essence when it comes to a mortgage, so try to be available as much as possible to avoid delays.

Application Submitted? What to Expect Next

Wait. After submitting your application, you get some time to breathe and sit back for a while. Depending on the intensity of your situation and the documentation you provided, it may take a few days or less for your mortgage lender to get back to you with a loan estimate.

Review. Once you receive your loan estimate, review the numbers carefully. At first glance, the numbers and terms you see may be tough to understand. Don’t hesitate to ask questions to your mortgage lender to get a better overview of what your mortgage will look like and what to expect.

Begin! After reviewing your loan estimate, you will let your lender know if you’d like to move forward, assuming nothing caught your eye on the loan estimate. Your agreement will give the green light to begin the mortgage process. Buckle up and good luck on the journey!

Ready to Apply?

Now that you understand a brief overview of applying for a mortgage, are you ready to apply? Head on over to our easy-to-access, easy-to-navigate application on our Fluid App. This unique mortgage app adopts useful technological features that help streamline the mortgage process and sets you up for homeownership success.

If you’re still on the fence about your decision, no worries! Remember that the option to buy a home will always be available. In the meantime, check out the various loan programs that could apply to your home buying situation. From conventional loans to veteran assistance loans, we strive to put you on the right path to guide you home.

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