Last updated on May 29th, 2019
It’s exhilarating when you receive a brand new set of house keys and open the door to your dream home. Until you get to that point, there are many details, deadlines, and decisions to consider, specifically during the mortgage process. Take the appropriate amount of time to research and learn about the mortgage process.
With this in mind, we’ve created an informative breakdown of the entire process with help from our TBI Mortgage professionals. From pre-approval advice to answering frequently asked questions, we want to help ensure that your mortgage process runs as smoothly as possible.
Before applying for a mortgage
While we’re here to help guide and assist you during the mortgage process, you should also take the time beforehand to ensure you have everything ready for when the process begins. Such factors to consider are:
Checking your credit report
Your credit report is a significant factor when it comes to being approved for a mortgage. If you’re thinking of purchasing a new home, it’s crucial that you review your credit report for any errors that could prevent you from being approved. Thankfully, there are plenty of services that can provide you with a personalized credit report. By doing this before you apply, you’ll allow yourself time to clear up any mistakes before they become major inconveniences.
Doing your mortgage homework
Although this may be your first time applying for a mortgage, you’re certainly not the first person to do so. Use this to your advantage! Take time to research what others have experienced during their own mortgage process. Try to get a general understanding of the general requirements of the mortgage process from the documentation you’ll need to provide to the types of finance options available to you.
Paying your bills on time
Your payment history is a major component of your credit score. It’s one of the most important factors when it comes to securing a mortgage or other types of credit. To manage your bills and avoid late charges, try setting up auto-pay, scheduling the same day on your calendar each month to pay the bills, and consider bill reminders via email or text.
Saving up money
Start budgeting early, so you can start putting away money for a down payment – the larger your down payment, the lower the risk (at least in the eyes of the lender). Keep your oldest account open to preserve the length of your credit history. Wait until you’ve moved into your home before closing accounts and spread out closures over time.
The Mortgage Process
Application and approval
Within 14 days of signing the sales contract for your new home, you’ll need to fill out an application package. This application includes submitting documentation such as bank statements, pay stubs, and other paperwork for approval. Here, a loan officer will be your primary contact as they assist you with any questions or problems you may have.
Finalizing your loan program
Once your application is reviewed and approved, the mortgage lender will issue a Loan Commitment. The commitment will provide an overview of the terms and conditions of your approval. It’s imperative that you notify your loan officer of any significant changes, like income and employment, as they may affect your approval.
Building your loan and locking in rates
As your home is being built, you’ll remain in contact with your loan officer and processor. It’s usually around this time that most start to consider their options for locking their interest rate. Fortunately, TBI Mortgage offers LockSolid Rate Protection, which can secure your rate for up to 12 months. By doing so, there are no surprises down the road if rates happen to increase throughout the process.
The home stretch
About 60 days prior to closing, you’ll once again submit the same documentation you submitted for your loan application. This step often catches home buyers off guard, but it’s important to know that this is common practice within the mortgage process. It allows for the mortgage lender to check for any changes that may affect your loan. After all the paperwork has been reviewed and accepted by your lender, the closing date will be scheduled with the seller.
Preparing for closing
At least 15 days before closing, any outstanding details of your loan approval must be satisfied, as the lender cannot prepare documents for closing until all information has been received and approved.
End of the mortgage process
Three days before settlement, or closing, the lender will issue a “Closing Disclosure”, which details the loan terms and the amount of funds needed for your settlement. Your Loan Officer will review your final loan terms as outlined on your Closing Disclosure and answer any questions you may have regarding settlement. After all of that is taken care of, you’re officially a new homeowner. Congratulations!
*Ken Bengtson, Deb Montini, and Jason Harrison of TBI Mortgage, a subsidiary of Toll Brothers, contributed to this story.