Congratulations! You have decided to purchase a home. Direction Mortgage is happy to assist you in the process. We will take you through – step by step – the process. Keep in mind that these steps will vary slightly depending on your situation, but generally speaking – the process goes something like this:
- Self-assessment and preparation
- Mortgage origination and processing
- Loan Conditions
It is important that you know what you can afford before beginning your house hunt. Nothing is more devastating that finding out that the house of your dreams is far beyond your financial reach. So, start by knowing how much you can afford per month. Utilize the mortgage calculatorto give yourself a rough estimate of what you can comfortably afford because no one knows your financial situation better than you.
After you have determined what home values you want to look at, you can contact a realtor to begin looking OR visit Direction Mortgage to begin the pre-approval process. Pre-approval simply means that you are submitting an application before you have found a house. The goal is to have a mortgage professional review your income, credit, and debit situation. Getting started is easy and requires just a few forms of documentation. Based on the initial assessment, we can tell you how much you would be approved for, which makes sense to do before you begin visiting houses with your realtor.
Origination simply means creating. During this step, a Direction Mortgage loan officer will create the loan by combining your application and the documents requested during the application process.
This process starts, in most cases, after you have made an offer and that offer has been accepted by the seller of your home. The signed purchase agreement is one of the documents needed to begin the origination process. Once a loan has been submitted to the lender for approval, the home appraisal and inspections will be ordered.
An underwriter determines how great of a risk you – as the borrower – are to the lender. There is a certain amount of risk that is allowed by an underwriter, so don’t feel that you have to have perfect credit and make a lot of money.
It is the nature of the business to take risks. However, there are parameters that an underwriter must ensure that the borrower meets. Primarily this is done by reviewing your credit score, income level, debts and the amount of money you are putting down. Mortgage approval lies within these four factors, more than anything else.
Don’t be surprised if, during this stage, you are asked to provide additional documents. For instance, if you have moved money out of your savings account recently – the underwriter may request for a written explanation of this. The underwriter will establish conditions for loan approval, which takes you to the home stretch in owning your home.
Your application will be put through an Automated Underwriting System. The computer will then create a list of items that need to be satisfied before the lender will agree to fund the loan. This can also be done by a human underwriter, but the end result is the same.
This step is a task list for you and your loan officer. The list of conditions must be completed before the loan will be cleared to close. Some common conditions are:
- Additional documents to prove your income
- Proof of homeowner’s insurance
- Property appraisal to determine the value of the home
- Letter from your employer to establish overtime frequency
Every underwriter is different, and it varies from lender to lender what requirements will need to be met before you can receive funding to close.
You made it! You have reached the final step, and you are that much closer to receiving the keys to your new home. Closing is the final step in the mortgage process. This is also called the settlement because this is when all of the funds are distributed to receiving parties, and all of the paperwork is finalized and signed.
The sellers will receive whatever proceeds they earned from the sale. The buyers will present a cashier’s check to cover their closing costs (if applicable). The deed is transferred from the seller to the buyer, and this marks the number of days (depending on what was decided in your purchase agreement) until you can move in to your new home.