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The Mortgage Process

The process of obtaining a mortgage can be broken down into 5 distinct steps. This section provides a very brief overview of those steps.

Deciding Which Loan Type Is Right For You - There are nearly as many loan types as there are types of buyers. We will only cover the very basic types here.

  • Fixed Rate: Interest rate does not change over the life of the loan.
  • Adjustable Rate: Interest rate changes with the general interest rates.
  • Government Guaranteed: These usually provide a slightly lower interest rate and are guaranteed by a government agency such as the FHA and the VA.

For more detail on mortgage types, please see Mortgage Types (Link to None Menu - General Loan Types). Remember when choosing a mortgage type, to take into consideration that while some loans may carry very low interest rates at the beginning, but may not be the best choice over the term of the loan. Choose carefully and talk to your lender.

Apply For A Loan - Applying for a loan can either be done before you have found your home, or after you've submitted a purchase offer. Pre-approval gives you the added benefit of knowing exactly how much you can spend and can help you avoid the common pitfall of looking at homes that are beyond your means. There is also the added advantage of increasing the seller's confidence that your loan will in fact be approved if you have pre-approval. This may make the present owner of your dream home somewhat more willing to accept your purchase offer and may speed up the entire loan process.

Loan Processing - Upon completing and submitting your paperwork, several things happen almost immediately. An appraisal of the property to ensure that the buying price is within range of the property's value. Within three days, you will receive a packet of mortgage documents. This packet will contain items that will require your careful attention and understanding. If you need help with any of these papers, contact your lender, your real estate agent, or your attorney. It's important to fully understand everything pertaining to your mortgage. As soon as you have applied for the mortgage, you should find a licensed settlement agent, possibly your attorney, to represent you at the closing of your loan.

Loan Approval - If you haven't already been pre-approved an underwriter will analyze your information, looking at your income and expenses, your savings, your credit rating, and the property itself. The decision will be made to either approve or deny your application, generally within just a few days. If the loan is approved, a closing or settlement date will be set.

Closing or Settlement - This is the moment you've been waiting for. On the appointed date, you, any co-applicants, and your settlement agent, will sit down with the lending institutions representatives. Loan documents will be explained and you will read and sign them. Your settlement agent can assist you buy answering any questions you might have about the documents you are signing. The laon amount will then be sent to an escrow account or sent to a closing agent. This varies from state to state.

At this point your new home awaits you so start packing and planning.


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