The Mortgage Process

When it comes to mortgage loans there are so many options it's easy to feel overwhelmed. This is why we encourage all of our borrowers to start by speaking with a Residential Mortgage Loan Originator so they can answer any questions you may have and assist you throughout each step of the process. 

You can prepare yourself for the mortgage loan application process by asking yourself a few questions:

  • How much can I afford to pay each month? 
  • How long do I plan on keeping this home? 
  • Is a lower monthly payment a higher priority than paying the loan down quickly? 
  • Am I able to make a down payment?
  • How many years do I want to pay a mortgage?
  • Will I be incurring any new obligations that I need to consider?

The answers to these questions will not only help your RMLO show you some additional loan options but it will also help them advise you on the best choices for your unique financial situation. 

There is a wide variety of loan options to choose from and it will be useful for us to know what's important to you and your family. Below are some dynamics that you may want to consider:

  • The larger the down payment, the lower your monthly payment will be. 
  • A fixed-interest rate will tend to be higher than the start rate of adjustable rates.
  • The longer the term of payback, the smaller the monthly payment.
  • The smaller your payment, the larger the amount that is going to interest.
  • The more you pay to interest, the slower you are building equity.

Understanding the basic loan types will be helpful. There are three types of loans to consider:

Loans are also classified as either government or conventional loans and conventional loans are further broken down into conforming and non-conforming categories. 

To qualify for a conforming loan (or an "A Paper" loan), it must fall under the guidelines established by Fannie Mae and Freddie Mac, corporations who have established industry standards and guidelines that govern credit requirements, down payment amounts and maximum loan amounts. 

Once you have decided on the general loan type, you and your loan officer will look over the individual features of specific loan types to determine which one will best meet you and your family's needs.

(If you have encountered a term you don't understand please feel free to Ask an Expert or consult our glossary for clarification.)

CREDIT

Excellent credit is very rewarding when applying for a mortgage and poor credit will limit your available loan options. A credit score or FICO score is a system of points earned based on your credit history. This three-digit number (from 300 to 900) is influenced by such factors, among others, as:

  • late payments
  • debt to credit ratio
  • total debt amount
  • age of accounts (the older the better)
  • inquiries

There are three major credit bureaus (Experian, Equifax and TransUnion) that produce comparable credit scores using a version of FICO, the industry standard developed originally by Fair Isaac and Company. 

Since this credit score or FICO score is used by most lenders to determine your qualifications for a loan, you may want to see what you can do to increase it before you apply for a mortgage. 

Your Residential Mortgage Loan Originator will explain all of the options and costs based on your credit scores during the Pre-Approval process. If you have any questions please give us a call 972-539-2500 x224 or submit a Free Consultation request below.

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