Understanding the Mortgage Process
We’ve broken down the loan process for home buyers in order to help you prepare for one of life's biggest purchases.
- Application: The first step is getting your home loan application underway. A great tip at this stage is to make sure you have your basic personal and financial information at hand when beginning your home loan application. Your credit score, employment status, and debt will all be collected and discussed.
- Pre-Approval: Not to be mistaken with a pre-qualification, a home loan pre-approval is a mortgage company’s commitment to issue a home loan for a specific property.
- Processing: This stage in the mortgage process will involve various documents, so please make sure you are prepared and as organized as possible coming into this step for the smoothest and quickest experience. You may also be asked for additional information throughout this stage, depending on your loan type and financial situation.
- Underwriting: During this mortgage process stage, someone known as an “underwriter” will review your application to make sure that your home and property are in good condition and that you’ll be able to repay your home loan.
- Closing: At closing, you’ll sign many documents, which include your mortgage note and HUD1 Statement. Once complete, you’ll be handed your keys and become an official homeowner!
Shopping For A Mortgage
Navigating the range of home loans to find one that best meets your needs can be a difficult process, especially for first-time buyers. To make things easier, the federal government and the state of Minnesota offer insured home loans tailored to first-time home buyers. These loans offer attractive benefits that can make the home-buying experience less costly and less restrictive.
First-time home buyer loans typically offer a lower down payment, reduced interest, limited fees and the possibility of deferring payments. These types of loans are offered at a federal level by the Federal Housing Administration and by most states. The FHA defines a first-time home buyer as a person who has never owned a home or has not owned a home for at least three years.
The comparatively lower restrictions on these loans make them ideal for first-time home buyers. You might want to consider these loans if:
- You don’t have enough money saved up for a large down payment.
- You have a limited ability to meet high interest payments and fees.
- Your credit score is not high enough to qualify for other loan types.
Even if you do have funds saved for a large down payment, the low interest rates on first-time home buyer loans could be too good to pass up. If you’re still unsure if you’re ready to buy your first home, we offer useful tools to help you better understand your first mortgage and your payment options. For example, try our mortgage calculator to see if you should buy a home (versus rent), see how much a monthly mortgage payment would be for you and even how much home you can afford! Popular Home Loan Options For First-Time Home Buyers: 30 Year Fixed Rate Mortgages, FHA Loans, ARM Loans, and VA Loans.
Visit our Home Buyer Resource Center for more information, down payment assistance programs, FAQ and more! CLICK HERE