The Entire Mortgage Process Explained Step-By-Step

Applying for a house is supposed to be an exciting time. Still, the thought of applying for a mortgage can be daunting, complex, and enough to put many of us ever trying to get our hands on our own home. While it usually takes some time and can be tricky getting everything together for the application, it doesn’t have to be as daunting as it seems.

In fact, learning all about the entire mortgage process step-by-step can make the whole thing a lot easier. From getting started with how to apply all the way through to closing the deal and everything in between, there’s a lot to think about before you can get your hands on the keys to your new place. So, where does someone start?

1. Get a mortgage pre-approved

The first thing to do before even looking for a house for sale is to get your mortgage pre-approved. This means looking at how much you will be able to afford and getting pre-approval from the bank. There are several different types of mortgages on the market, with most preferring a 20% deposit. People also need to take into consideration the interest repayments when factoring in how much they can afford to repay each month. Once you have the figures in place, apply for a pre-approval - which usually gets approved fairly quickly after a short credit check - and you have the maximum a bank will be willing to lend you.

2. Find a property within your budget and that you like

Many people start looking for houses as soon as they decide they want to get on the housing ladder or move somewhere new. However, this can be enough to get our hopes up, especially as things tend to move fairly quickly once someone is interested. Instead, find out how much you can borrow for your mortgage and then start your search. Once you have somewhere you like, it’s time to put in your offer. Of course, learning how to negotiate helps here.

3. Apply for your full mortgage

You’ve had your offer accepted and still want to buy your new home? It’s time to apply for your full mortgage. Now, the bank will do a more in-depth search into your credit history before agreeing to your application. This includes your employment records, income, assets, any debts, property information, and any negative credit history - usually from the last few years. If you’re applying for a mortgage with someone else, they also need to pass the checks. The best way to make sure you fly through the mortgage application is to ensure your credit history is in check before thinking about applying for a mortgage. 

4. Complete the process of your loan

If your mortgage application is approved, then you will receive a loan estimate within three working days. This is a simple form that explains everything in the easiest terms and is valid for ten business days. If you want to accept the offer, then be sure to do so as soon as possible, so the lender doesn’t change its mind. If your application is rejected, then you should hear back within 30 days with an explanation.

5. Allow the underwriters to assess your mortgage

Underwriters are one of the key aspects of the entire mortgage process. These are the people who are the key decision makers as they finalize your application for a mortgage. They check every step and do things such as check the value of the property compared to the amount of money you’re being lent. Once they have finished, one of three things will happen: you’re approved, you’re rejected, or it’s approved with conditions. Once it’s approved, your mortgage’s interest rate will be locked in. 

6. Close the deal on your new property

Once the rest of your mortgage process is complete, it’s time to close the deal on your new property. This typically involves meeting with an attorney and signing documents, as well as paying closing fees. These are usually between 2% and 5%, so it’s important to factor this into your costs. If you see new fees, then immediately get things checked to ensure you’re not paying more money than expected. From there, it’s merely time for the final walk-through and preparing everything you need to move into your new home!

The entire mortgage process doesn’t have to be as daunting as it seems on the surface, especially once it’s broken down step-by-step. Hopefully, it won’t be long until we get to enjoy our new home with an approved mortgage application under our belt.