A crucial step in the mortgage process, getting preapproved prevents you from missing out on your dream home, helps determine your budget, and embeds any offer you might make with the weight of an entire lending team. Note that there are three levels mortgage readiness.
- Preapproval: Without preapproval, sellers likely won’t accept your offer. This is a lender’s indication that they will lend you money for a home. To get pre-approved, you must turn in all the financial documents you would for a loan application. Once complete, you will receive a pre-approval letter, which shows sellers you’re serious about buying. Unlike prequalification, a pre-approval identifies any potential issues before starting the home search because it verifies your credit history.
- Apex Approval*: The highest level of mortgage readiness, Apex Approved means that all of the processing and underwriting work for your loan is completed upfront. Apex Approved puts you in a position to close on your home in as little as 15 days after receiving your purchase contract, making your offer very attractive to sellers, particularly in competitive bidding situations.
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- Explore grant and Down Payment Assistance programs that can curb the expense of homeownership, such as the Mortgage Credit Certificate, Maryland Mortgage Program, VHDA program, DC Open Doors program, Delaware State Housing, or Housing Opportunities Commission (HOC).
- Employ budgeting techniques to help your household save more. Here are eight we recommend.
- Ask yourself the right questions up front. We’ve identified three common questions that could save you thousands.
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It’s crucial that the lender you choose has a clearly-defined, transparent process. Without one, who knows how long your loan could take? We value transparency and efficiency, which is why we lay out exactly what you can expect when you let us lend a hand. We are dedicated to making your first mortgage experience as easy and seamless as possible. We’ve developed a straightforward process for our homebuyers that begins with a simple conversation and ends with a happy homeowner.
- Application
With the help of your lending team, we’ll use the documents you’ve gathered to complete a loan application. Then, we’ll get to work preparing the final documents you’ll need to sign to lock in your loan. You can apply at one of our locations, online, or by phone. - Documents
The most time-sensitive step in the process, at this stage your loan disclosure documents will be prepared and sent to you to be signed. Return them within three business days to avoid any delays! At this point in the process, you should consult with your mortgage banker about locking in an interest rate.* - Processing
Now the ball’s in our court. Our in-house team of processors will work collaboratively and efficiently to review financial documents, order reports such as an appraisal, and prepare your loan file for Underwriting. - Underwriting
A professional will make sure your app is up to code. An Underwriter will review your loan file to verify it meets lending requirements. Then, they’ll either approve your loan, request anything else they might need to do so, or (in rare cases) deny/suspend the application. - Cleared to Close
The path to homeownership is cleared! Expect to receive a Closing Disclosure outlining the terms of your loan shortly. Your Mortgage Banker will contact you to schedule a settlement date and send our pre-close letter. In the meantime, you can prepare for closing. - Closing
Congratulations! You’re a new homeowner.
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Buying a home is likely the largest purchase you’ll make in your lifetime. Choosing the right mortgage to complement your financial goals is critical. With so many options available, it can be challenging to find the right loan for you – which is why we’re here to make this important decision easier. There are two main types of mortgages: conventional and government-backed.
- A conventional loan is one that is not guaranteed or insured by the US Government. Conventional loans are an ideal loan type for homebuyers with good credit scores.
- A government-backed loan is guaranteed or insured by a federal institutions, like the Federal Housing Administration (FHA), Veteran’s Affairs (VA), or the US Department of Agriculture (USDA). Government-back loans, such as FHA loans, VA Loans, and USDA loans are often great if you don’t have a large down payment saved, but have solid credit and a stable income. There are three common government-backed loans homebuyers can choose.
When choosing the loan that’s right for you, you’ll need to select a loan term, or the duration of your mortgage loan in years. The most common mortgage terms are 30 and 15 years, but conventional loans can have loan terms of 10, 15, 20, or 30 years. When choosing a loan term, you should consider your needed cashflow each month, how long you plan to remain in the mortgage, and how quickly you want to gain equity. Weighing the pros and cons of a 15-year mortgage vs. a 30-year mortgage is a good place to start.
The term of your loan will be one contributing factor that determines your monthly payment. The other determinants include your loan amount and interest rate.
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Closing costs are fees incurred for the preparation and funding of your loan. These charges are made by third parties, your lender, insurance companies, and housing authorities. Among other things, closing costs cover your loan setup, appraisal, credit report, and settlement expenses. Prepaids are also factored into closing costs, and may include items such as hazard insurance or upfront mortgage insurance premiums, for example.
Closing costs are generally 2-5 percent of the value of a home for both purchases and refinances. However, closing costs vary depending on the type of loan you choose. In fact, for certain refinance transactions, it’s possible to roll your closing costs into the loan amount, depending on the program.
Keep in mind that your Mortgage Banker will provide you with an estimate of closing costs when looking at different loan types, so you’ll be able to compare loan options and ensure you’re making the best decision for you and your family.
When choosing the loan that’s right for you, you’ll need to select a loan term, or the duration of your mortgage loan in years. The most common mortgage terms are 30 and 15 years, but conventional loans can have loan terms of 10, 15, 20, or 30 years. When choosing a loan term, you should consider your needed cashflow each month, how long you plan to remain in the mortgage, and how quickly you want to gain equity. Weighing the pros and cons of a 15-year mortgage vs. a 30-year mortgage is a good place to start.
The term of your loan will be one contributing factor that determines your monthly payment. The other determinants include your loan amount and interest rate.
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Ken Venick
Cell: (410) 598-9410
Business: (667) 888-4501
ken@kenvenick.com