Mortgage Financing And Home Loans
Want to buy a home? If so, mortgage financing is a process you ought to fully understand before searching for desirable properties.
Here is a brief primer on the mortgage financing process and what you’ll need to know to get started.
Mortgage financing is a two-stage process. The first step is the pre-approval stage, which will prove you qualify for a home loan. Qualifying for a home loan will be based on your employment situations, loan repayment history, plus your current debt load. This first step should be fully completed before searching for a home or applying for mortgage financing.
For this first stage of mortgage financing- known as the pre approval process- your mortgage lender/broker will guide you in gathering needed documents, items such as recent pay stubs, employment confirmation letter, proof of down payment and closing costs funds, income tax assessments and any additional information, required for your specific circumstances.
Once the first stage is completed, you will understand your price limit, and the monthly costs you can expect to carry. A payment calculator may be used to get a ballpark idea but a mortgage broker/lender will be your best source for home loan budgeting accuracy.
The second step is to make sure your desired property qualifies for the home loan, which is the mortgage approval stage.
This occurs once you have played with a payment calculator, budgeted, found your home and your offer to purchase has been accepted. At this point, your mortgage broker/lender in conjunction with your REALTOR® shall receive all pertinent property details and pending purchase details (price, conditions, terms, etc).
This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
Typically the time needed for a lender to assess and approve the mortgage financing application will be three to ten business days.
Therefore sellers on the advice of their agent will expect to wait no more than ten days on average for a buyer’s mortgage approval. A request for more time could cause an offer to be rejected, for fear that the buyer has not completed the first step of the qualification process, is not pre-qualified and may not therefore be able to borrow the amount needed. All the more reason to have a pre-approval in place prior to searching for your new home.
When you begin the home loan process, make sure you’ve thoroughly explored the facets of mortgage financing. Consider how much you can borrow, and compare with how much you comfortably want to borrow. Use a payment calculator (payment calculators are free to use) to get started but always discuss with a professional mortgage broker/lender.
Be sure to select a property that will stand up to scrutiny, as lenders won’t lend on risky properties.
And, if you do not have a trusted mortgage broker/lender in mind contact a reputable and reliable real estate agent to discuss you plans and to get guidance. Make this your first step. Mortgage financing can be tricky, but with a real estate professional by your side, you’ll be primed and ready to make it through with flying colours.
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