If you are ready to become a first-time homeowner and are itching to get started shopping Chattanooga homes for sale, it is time to learn a few things about how to get the mortgage you need for your purchase. The mortgage process can often be the most complicated part of buying a home, but being well-prepared to tackle it can make things easier and less stressful. Here are some key points to understand the mortgage process:
Having all your ducks in a row before beginning the mortgage process can help ensure that you can make the process work to your best advantage. Here are some important steps to take to get ready to apply for a mortgage:
Save for a down payment of at least 10 percent – This makes it much more likely that you will be approved for a mortgage and that you'll get a favorable interest rate on that loan. If you can have 20 percent of your new home's purchase price on hand for a down payment, that's even better.
Get your credit ready – Get a copy of your credit report and do what you can to improve your score, including correcting any errors on your report and paying off as much debt as you can to ensure an acceptable debt-to-income ratio. To get your best deal on a home loan, you should try to achieve a credit score of at least 700 and a debt-to-income score of about 36 percent.
Gather your documents – What you'll need when you apply for a mortgage will depend on your individual circumstances, but documents most commonly required include pay stubs, W-2 forms, tax returns, bank statements and detailed information on debts or supplemental income streams.
Getting Pre-Approved is Wise
Getting pre-approved for a mortgage before you start shopping for your new home has a number of advantages. Among the most important of these is that having a pre-approval letter in hand can make you more attractive to sellers, increasing the odds of having purchase offers accepted. It can also help you narrow your search to just those homes you can afford, streamlining the home shopping process. Additionally, getting pre-approved before the clock starts ticking on a purchase offer means less pressure on you as you shop around for the best deal on your home loan.
Once You've Found a Home
If you have been pre-approved for a mortgage, your lender will lay out the next steps for finalizing your loan. If you haven't, the mortgage process begins with filling out mortgage applications, presenting the documents required for approval, and getting and comparing loan estimates from several lenders.
Once you have chosen a lender and been approved for a loan, the loan processing, and underwriting phases begin, which generally take 2 or 3 weeks. Be ready to move quickly during this phase should your lender need additional documents from you.
Once these steps are complete, your loan will be cleared for closing. When this happens, you will receive a breakdown of the closing costs and other fees you'll need to pay as you sign your closing documents, finalizing your loan -- and your home purchase.
If you need more help in understanding the mortgage process, contact us. Our REALTORS® will be happy to put their knowledge and experience to work to help you smooth your path towards becoming a homeowner.