We are here to take some of the worry and work out of preparing to obtain a mortgage. These steps to getting a mortgage can guide you on one of the biggest investments of your life.
What are the Steps to Getting a Mortgage?
Preapproval is essential when mapping out the steps to getting a mortgage. The steps to get preapproved for a mortgage include finding a lender, filling out an official application, and providing the necessary documents. Your credit report will be run during this time to determine your overall financial standing for getting a mortgage. The income you can use as you prepare to start the steps to getting a mortgage includes social security payments, military benefits, alimony, child support, investment accounts, commission, and overtime. Collect bank statements from the last several months, tax returns for the past two years, any statements for outstanding debt like lines of credit or rent. Other financial documents you will need will be anything that can explain large deposits, credit inquiries, child support, or bankruptcies, and your most recent paystubs to prepare for preapproval.
What are the Four Financial Steps to Qualify for a Mortgage?
One: You will need to look at your credit. Your credit score shows a lender how reliable you are based on your history and habits. Your score is suggested to be around 620 to qualify for a mortgage. FHA loans are probably a good idea if you fall in the 580 range. Two: You also want to know your debt-to-income ratio. That is the percentage that informs lenders on how much of your gross monthly income goes to required bills monthly. If you need to figure that out, add up the minimum you pay each month on recurring debt, then divide that by your total pre-tax income. Do not include your utilities, entertainment, or health insurance premiums in your recurring debt calculation. Three: Your assets will probably be something lenders specifically inquire about as you take steps to get preapproved for a mortgage. Verification of the amount for the down payment that is accessible in a liquid cash account will also be discussed. A steady cash reserve may be a requirement if this is an investment property. Four: After the loan submission, you can look for a Good Faith Estimate (GFI) to provide a better idea of estimated closing costs. The final closing costs will more than likely change some, but this will put you more in the ballpark of what you will need to have.
Once you are preapproved and find a home you want to make an offer on, you will work with a mortgage broker or lender to submit a loan application. You will need to give information about yourself, property details, and the loan type that you are using to get the home. Mortgage processing, underwriting, appraisal, and inspection are the next steps to getting a mortgage. These steps take a closer look at your credit history and require a professional appraisal of the home you want to purchase to guarantee the loan amount and the amount the home is worth match. Of course, receiving the approval decision is the main step in getting a mortgage. It can be approved, approved with conditions, suspended, or denied. If conditions need to be worked out or more documentation is required, that will lead to the loan being approved with conditions or suspended. Denial of a loan happens if employment history or credit history presents too many issues.
How Long Does it Take to Get a Mortgage From Start to Finish?
On average, preapproval will take about one week, looking for a property may take a few months, preparing to close (going through the final steps) will take around one month, and making it to the closing table will take about a week. Of course, these timelines can change, but that is an idea of what to expect as you start the steps to getting preapproved for a mortgage and the steps to getting a mortgage.