You found your dream home (or at least one you’re happy enough with to buy). Now comes the next step. Getting a mortgage.
Now what? Below you’ll get an overview of how to apply for a mortgage. Find out what documents you need. Learn about the steps involved. Just get a basic understanding of what to expect.
And, please keep in mind that these steps are not written in stone. Below is an overview of the common things you’ll need to apply for a mortgage and how to do it. But different mortgage companies handle things differently.
So, once you choose a mortgage company, let them walk you through the exact steps so you make sure you check all the boxes.
Okay, with that said, let’s jump into it.
How To Apply For A Mortgage
Before you can apply for a house loan, there are some prerequisite requirements that you first need to show. These documents are all about your employment history, creditworthiness, and your financial status.
Here are the requirements that you typically need to show before you apply for your mortgage.
- Your last 2 years of W-2s forms showing your income from your job
- Updated pay stubs that at least cover the last 30 days
- Complete bank statements for all financial accounts including investments updated at least in the last 60 days
- Personal and business tax returns (the official ones that are signed)
- If you are self-employed, then you’ll usually need to provide a copy of most recent quarterly or year-to-date profit/loss statement for your business
- A copy of the signed Purchase and Sales Agreement on your new home
Now that you have all that, let us get into the steps to apply for a house loan or mortgage. Here are the steps how:
Fill out your mortgage application
This is step one. Once you id the potential lenders/lending organizations for your home loan, they will give you an application form that you have to fill-up. Most of the time, home loan applications follow the format of the Uniform Residential Loan Application.
This lets the mortgage company gather info regarding certain things about you. These things include your finances, debts, assets, employment, the loan and the property.
Carefully read and compare your loan estimates
If you apply to more than just a single lender, you want to compare the estimates you get. To help, you can use a Loan Estimate form to compare each loan’s terms and cost.
Pay attention to the expiration date and the interest rate. Take a look if the interest rate is locked or not. A locked interest rate means that the rate will not change before the loan closes or the lock expires.
Compare the fees and closing costs that you will pay to the mortgage company, title company and others and see how they compare.
Note any points, PMI (private mortgage insurance) or other fees that factor into the total cost of the mortgage.
Pick the right lender
Once you are done comparing and you have found the right lender, make sure that this is the one you can trust. This may involve a bit of background research to make sure they are an institution you can trust. Always remember, the company with the lowest rate/fees may not be the best one for you to get your mortgage from.
When you decide who you’re going to go with, let them know you’re ready to move forward with them.
Prepare for possible questioning and request of documents
Like we have said earlier, to apply for a mortgage, you will need to present certain documents. Those documents will be verified by the mortgage lender.
Sometimes the lender will have questions. And/or they may need more documents. It’s just part of the process..
Once they have everything they need, it’s really just a waiting game for you at this point. The mortgage lender will do all their verifications and checks on you. The loan will go to underwriting and, assuming all goes smoothly there, you get final approval and the go-ahead to close on your new home.