The mortgage process can seem very complicated if you’ve never gone through it before. Knowing the ins and outs of getting a mortgage begins with learning how to get started with a mortgage loan and what you need to do to get ready.
Once you’ve prepared for the mortgage process, it’s helpful to understand what comes next. As one of the best mortgage lenders in the Charlotte, NC, area, we at Fairway want to make sure you know exactly what to expect. You’ll feel much more confident as a homebuyer – and you’ll be one step closer to owning your own home.
Read on to learn more about the different steps of the mortgage process and how it all works.
Loan Application
Step one of the mortgage process is filling out your mortgage application. At Fairway of the Carolinas, we provide prospective applicants with a checklist that includes all the documents you’ll need to complete the mortgage application, including:
- Signed tax returns
- W2s from work
- Pay stubs
- Banking statements for checking, savings and investments
These documents tell your mortgage lender your income and expenses, which helps in determining how much of a mortgage may be approved for.
When you’ve gathered your important papers, fill the application out completely and accurately and submit it to your lender.
Disclosures
Your mortgage lender must provide you with a loan estimate and federal and state disclosures. This information lets you know what to expect in terms of your loan amount and the costs of borrowing. These disclosures are required by law, and they are intended to help you be fully informed about your loan and the expenses associated with it.
If everything looks good, then you as the borrower provide your lender with the intent to proceed.
Underwriting
At this point, your mortgage loan goes to what’s called “underwriting.” During this step of the process, experts at the mortgage lender carefully examine all the information you provided to determine whether you qualify for the home loan. They use multiple kinds of information to decide. For example, Fairway underwrites your loan without requiring a property appraisal, which can streamline the process for you. Rather, you’ll be qualified based on your credit, income and assets. Other lenders may require property appraisals, which usually cost about $400.
Pre-Approval
Good news: You’ve been pre-approved! If your lender has determined that you qualify for the mortgage, they’ll approve you and send a pre-approval letter. You can use your pre-approval letter to show real estate agents that you are qualified to buy homes – that you’re a serious buyer. And with a Fairway Advantage Preapproval Letter, it’s as close as you can get to a guarantee, which sellers love because it shows you’re serious, you’re qualified, and you can close fast.
You may even qualify for a signed, Certified Pre-Approval from Fairway, which guarantees that your loan will close as promised or you’ll receive up to $7,500 of your funds back. It’s like the mortgage equivalent of a money-back guarantee, and gives you incredible confidence when home shopping.
Shopping for a Home in Charlotte
It’s time to search for your home! Using your pre-approval figures, you can enlist the help of a real estate agent to find homes in the greater Charlotte area in your price range. Single-family homes, condos, town homes – whatever you’re looking for, now’s the time to search!
Found a home that ticks all the boxes? Perfect. Once you’ve found a home, your agent will help you make an offer to the seller.
Purchase Price Negotiation
Hopefully, you’ve made an offer the seller finds appealing, but don’t be alarmed if they come back with a counteroffer – that’s a normal part of the negotiation process. Carefully consider what the seller is offering and see whether you can come to an agreement. Remember, the seller has their own motivations and thought processes! But chances are, they want to complete the sale, too.
When your offer has been accepted, bring the contract to your loan officer so they can complete the loan.
Earnest Money
Are you familiar with “earnest money”? This is the amount of money you deposit in an escrow account to show that you are serious about buying the property. It’s usually between 1% and 3% of the price of the home, but if it’s an especially tight battle for a particular property, you may need to put down as much as 10%. These funds go into an escrow account (not the seller’s account) and can either go toward your down payment at closing or get refunded back to you. Put down your earnest money to move forward to the next step.
Appraisal
Before everything gets finalized, you’ll want to get an appraisal on the home. This is a professional evaluation of the property’s value, and it’s useful information to both you and the lender. At Fairway, we can order the appraisal for you and send it directly to the underwriter, saving you time and hassle.
Final Loan Approval
If the appraisal looks good and everything checks out, the lender completes the final loan approval, clearing the way for closing. That’s great news!
Closing Disclosure
At this point, your lender will release the closing disclosure. This is a form that shows you the loan amount, monthly payment, and any fees and costs associated with the mortgage and the closing. You can share this with the real estate agent or even have it delivered directly to them with prior authorization.
Money for closing
Remember that down payment you’ve been saving for? Well, now’s the time you’ll have to hand it over. You’ll also need to have funds to pay your closing costs. Wire transfers are one option for handling this sum; cashier’s checks or certified checks are other methods to consider. At Fairway, we’ll tell you the final amount due for your closing costs so you aren’t taken by surprise.
Final Closing Step
The final step in the mortgage process is the actual closing. At this time, you’ll arrange to meet with the title company to sign the papers and complete the transaction. Bring your photo ID and the money for closing in the format you agreed to with the title company. Stretch out those fingers and grab a pen – you have a lot of signing to do!
Funding of the Loan
Congratulations: You are now a homeowner! Your loan is funded and the sale is complete. Now it’s time to take the keys and maybe even pose for a photo – the home is yours. Welcome to homeownership!
Keep this step-by-step mortgage process in mind when it’s time to shop for your new home. If you have trouble finding the perfect loan, just remember that Fairway provides Charlotte-based mortgage planning assistance every step of the way, so you never have to go it alone.
References
https://www.chase.com/personal/mortgage/education/financing-a-home/understanding-earnest-money
https://www.consumerfinance.gov/ask-cfpb/what-is-a-closing-disclosure-en-1983/
