Confucius once said, “The man who asks a question is a fool for a minute, the man who does not ask is a fool for life.” So I guess the wise question to ask is, ” What is the best way to go about applying for a loan?” So many people think it is an overly complicated process and stress out even thinking about it, let alone actually apply for it. With that being said there are a few main points that can make this process seem pretty effortless.
The first point I would say is to pick a team you are confident in. For example, if you were going to hire a contractor to build your new home, would you hire the first guy you find on google? I would hope not! Check out who you are working with, how are their reviews online? What are people saying about them? Do you feel supported and comfortable when you are speaking with them? Your team is there to support you and your success in your homebuying process. There are 5 key people that make up your team; the loan officer, the real estate agent, the home inspector, the loan processor, and the appraiser.
The Application
With that being said, lets focus on the loan officer since we are discussing the best way to go about applying for a loan. Here is what to do for success when working the the loan officer. Before you even start shopping for your home apply for the loan. Here you will have a conversation about getting pre-qualified. This helps the lender see what program would work best for your situation, potentially how much you might be able to work with financially, as well as what documents may be required for your loan. Here the lender might do a soft pull, which means they pull an unofficial credit report. It is an inquiry that does not show on the actual credit report but gives the lender an idea.
Shopping for your Home
Once you are pre-qualified, it is time to start shopping for your new home. Your realtor will help you find a property that works with your wish list, price range, and location. After you have found the home you would like to purchase, you would “make an offer on a home”. Once the offer is accepted, your home is officially “under contract”, and the mortgage professionals move forward with processing your loan.
Inspections
Now that your home is under contract, there are a few inspections that need to happen. The types of inspections that might be needed usually pertain to the type of loan program you are using. Regardless of what loan program you are using, an appraisal needs to happen. When the home is appraised, the inspector is able to find the true value of the home. Some might recommend having other inspections like termite, septic, etc to get a better understanding of the home that you are purchasing.
Underwriting
So you got pre-approved, found a home, and had it inspected. What’s next? Underwriting. This process consists of comparing your application, credit card, and documentation to loan program guidelines. There are a handful of documents that are requested at this time. The best piece of advice I can give you at this point, pay attention to what the loan officer is asking you. For example, the lender might be asking you for a bank statement and you pull your recent bank statements from the past few years. You might noticed that the document is 5 pages but the 5th page is blank. It might make sense to leave that last page out since its blank but the lender needs all the pages. Hence why I say, “pay attention to what the loan officer is asking you for”. Simplify the process but seeing exactly what is needed and sending it as requested. This step is completed when the underwriter states, “You are clear to close”.
Closing
You are almost there! So close to being ready to move into your new home. At this point you insurance binder is finalized, invoices reviewed, closing date is set, closing documents are prepared, final verbal verification of employment, and the settlement company is preparing all that is needed to for actual closing. On the day of the closing all the documentation is presented to be signed and the funds are transferred, then the deed and mortgage is recorded. The home is now officially in your name!
Now you can confidently start the process of owning your own home. As mentioned in the beginning of this article, it is all about having the right team/ support system on your side. They are on your side and guiding you every step of the way. Best of luck getting your new home!
