Mortgage Process

Obtaining a mortgage loan can be a difficult process. But it doesn't have to be. This is a step by step guide on the process of getting a loan. Use this as a reference and be more prepared to get the best possible mortgage loan available.

1. How much can I afford?
2. Mortgage Programs and Options
3. Getting the necessary paperwork
4. Getting Pre-Approved
5. Closing
   

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1. How much can I afford?

Debt to Income Ratio

This is a common term you will hear during the initial mortgage application process. You can figure your debt to income ratio by dividing the total amount of your bills (only long term debt such as credit cards, car loans, etc.) including the new house payment and dividing by your total gross monthly income (before taxes). Just remember that because it looks good on paper doesn't mean it is an affordable payment. You have to be honest with yourself and set a realistic mortgage payment that you can truly afford. Please remember that most lenders require a debt to income ratio that is less than 55%.

Here is the math

	Monthly Bills	$300
+	Mortgage Payment	$700
÷	Gross Monthly Income	$2000
=	Debt to Income Ratio	50%

So what does that mean?

This person could afford a $700 per month mortgage payment. However, many factors contribute to how much that $700 gets you.

These are things that you may have to pay in addition to your principal and interest payment. These items vary greatly so it important to understand them when considering how much you can afford.

• Mortgage Insurance

  Normally required on all mortgage loans where you don't put at least 20% down. It basically protects the bank should you go into foreclosure. Once you reach 20% equity in your home you may be able to get it removed.

• Property Taxes

  Sometimes the local property taxes you have to pay will be included in your payment. It is held in an escrow account and the lender pays your taxes for you.

• Homeowners Insurance

  Just like renters insurance, it protects you from potential hazards. You have the right to obtain homeowners insurance from the company you choose. You can include it in your payments if you choose; some lenders require it. It is always a good idea to have insurance, even if it is not required.

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2. Mortgage Programs and Options

See our mortgage programs page for information on the different mortgage programs available.

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3. Getting the necessary paperwork

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4. Getting Pre-Approved

The next thing you will have to do is fill out an application. We will help fill out the application from the information you provide us.

It is important to be honest when filling out the application. If we have good information, we will be better prepared to find the best lender for your situation. Don't worry about blemishes or rough spots - we know how to handle those situations.

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5. Closing

Closing is the summation of all you have worked for. This will be an easy process because you are well aware at this point what you are getting. You meet with a closing agent who prepares all your closing documents. Checks are drawn and distributed. And wire transfers fund the loan. After this you are now the owner of a new home. Or the proud owner of a more affordable home after refinancing.

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