Step 1: Prepare Your Financial Paperwork

Having accurate answers to home loan application questions can prevent surprises once the mortgage process is underway. If you provide the right mortgage documents upfront, you’ll likely have a smoother mortgage experience.

Here’s what you’ll need:

• Full name. List your full legal name, and add suffixes in the name field, so only your credit information is pulled.
• Dependents. The definition of dependents varies by loan type. For example, loans guaranteed by the U.S. Department of Veterans Affairs (VA) require the ages and number of children in a family.
• Address history. You’ll need to include two years’ worth of addresses. The lender matches this information to your credit report.
• Total assets. Collect two months’ worth of bank and retirement statements. Adding those to the mix will strengthen your application if you have money in 401(k) and retirement funds.
• Employment and income information. In addition to pay stubs and W-2s for the last two years, provide your current employer’s company name, address, and phone number. Lenders will need the information to verify your employment again before closing.

Step2: Choose The Right Mortgage Type

A loan officer reviews your mortgage application to see if it meets the home loan requirements of several different programs. If you haven’t already, we invite you to visit “5 Types of Mortgage Loans For All Home Buyers” for all your home loan options.

The main types of mortgages include:

• Conventional loans – These are best for homebuyers with solid credit and a decent down payment saved up. They’re available at most banks and through many independent mortgage lenders.
• Government-insured loans (FHA, USDA, or VA) – These can be great options for qualified borrowers who may otherwise struggle to buy a home. Government-insured loans are widely available through many institutions but are targeted at borrowers with less-than-stellar credit. USDA loans have some geographical restrictions, and VA loans can only go to military members, veterans, or spouses.
• Jumbo loans – These are for the big spenders out there. Conventional loans have a maximum allowable value, and if you need to finance more than that ($548,250 in most parts of the country or $822,375 in more expensive areas), you’ll need to get a jumbo loan.

Step 3: Choose The Right Type of Mortgage Lender

Once you have your financial ducks in a row, it’s time to find a mortgage lender. It’s essential to shop around for multiple offers to make sure you’re getting the best possible deal, not just the lowest interest rate. When looking around, make sure you pay attention to all the fees and other conditions of every offer.

Mortgage bankers: Mortgage banks offer various programs, and the entire mortgage process is usually handled in-house.

Mortgage brokers: Mortgage brokers work with multiple lenders to provide more options than a single mortgage bank.

Institutional banks: Your local bank may offer mortgages with a lower rate if you carry a large deposit balance. Depending on the bank, though, loan offerings may be limited.

For many borrowers, applying for a mortgage is overwhelming. If you’re not sure precisely what to look for, Rising Sun Lending is here to help! Our experienced brokers can help you navigate all the different loan options available to you and can secure you more favorable loan terms than you’d be able to get by applying on your own.

Step 4: Submit Your Mortgage Application

Once you’ve completed the steps above, the actual application process should be quick and easy — you need to decide how you want to apply. Each lender is required to provide a loan estimate (LE) within three business days of receiving your mortgage application. Keep copies of each assessment you receive to negotiate your interest rate and closing costs later.

• Online application: Whether it’s on your laptop, desktop, or smartphone, many lenders offer options to apply for a mortgage online.
• Over-the-phone applications: Many lenders allow borrowers to apply by phone. A loan officer can walk you through each section and give you feedback along the way.
• In-person application: Face-to-face meetings may be less likely in the post-COVID-19 mortgage world, but they may still be possible depending on your state’s guidelines. You’ll be able to see your credit report, review a loan estimate and get a preapproval letter on the spot with an in-person mortgage application. The lender can move your application to the final approval stage with all of your mortgage documents in hand.

Step 5: Wait Out The Underwriting Process

Even though you may be preapproved for a loan, that doesn’t mean you’ll ultimately get financing from the lender. The final decision will come from the lender’s underwriting department, which evaluates the risk of each prospective borrower, and determines the loan amount, how much the loan will cost, and more.

There are a few steps involved in the underwriting process:

1. First, a loan processor will confirm the information you provided during the application process.
2. After you make an offer on a home, the lender will conduct an appraisal of the property to determine whether the amount in your offer is appropriate. The appraised value depends on many factors, including the home’s condition and comparable properties.
3. A title company will conduct a title search to ensure the property can be transferred. A title insurer will issue an insurance policy that guarantees the accuracy of this research.
4. Finally, you’ll get a decision from the underwriter: approved, approved with conditions, suspended (meaning more documentation is needed), or denied.