4 Easy Steps to Getting a Mortgage Loan

Written by Posted On Tuesday, 08 July 2014 13:57

Whether you’re buying your first house or moving up to a bigger and better one, chances are you’re going to need a mortgage. That’s why securing a mortgage and getting your finances in order is the first step for any buyer.

Where exactly do you start? Well when I started writing this piece I went straight to the source – real estate financial advisor and expert Renee Wiginton. Renee works with a First Team affiliate company helping buyers find the perfect mortgage loan to fit their needs.

So what’s the first step for any buyer to getting a mortgage? Same as mine – start talking with the person who knows it all!

1. Consult with a real estate financial advisor

The first person you want to speak with is an experienced real estate financial advisor (some call themselves loan officers).  A financial advisor will counsel buyers on tailoring the perfect loan to fit their specific lifestyle and situation.

The reason you need to start with a real estate financial expert is because only they have access to the underwriting systems you need to officially and accurately determine once and for all what type of mortgage you will qualify for.

Make it easier: The best way to find a trustworthy financial advisor is to get a referral from a real estate agent. If you’re a first-time buyer you will have a lot of questions and a buyer’s agent is the perfect person to answer all of them and connect you with all the help you need throughout the buying process (financial professionals, tax specialists, service contractors, etc.)

2. Get Pre-Approved For a Home Loan

First of all, there is a difference between a pre-approval and a pre-qualification – and you want the pre-approval. A preapproval requires your 2 most recent pay check stubs, 2 most recent bank statements and 2 most recent tax returns including all schedules. A valid pre-approval is what buyers need in order to determine their maximum buying power. A valid pre-approval must come from a loan officer, not just a conversation with your real estate agent about your basic finances.

First of all your financial advisor will run your credit through 3 repositories: Experian, Equifax and Trasunion.  From these reports they will get your middle credit score to determine the risk of the loan. Then they are going to qualify you based on your income and long term debt (determined from all that paperwork your brought) i.e. the buyer’s debt-to-income ratio. Along with that the loan officer will probably run all of your information through an automated underwriting system – there’s one for Freddie Mac and one for Fannie Mae.

Make it easier: DON’T waste your time with a pre-qualification. A pre-qual doesn’t mean the loan officer properly reviewed all the income and asset documentation. It is simply an estimate of what you probably can afford based on your basic financial information like how much you make and what debts you currently have. This type of basic (and most likely inaccurate) estimate of your buying power will only lead to wasting time searching for homes that aren’t right for you.

3. Plan accordingly

Sometimes buyers have in mind what they think they should do in order to prepare for homeownership when it’s not that at all. For example some people will pay off a car when there’s less than 10 months left on the car payment, but they just spend all of their money that they needed for closing costs. Closing costs on average are 2-5% of a home’s price so that’s a lot of extra money you will need to set aside for your purchase.

Also, if you’re self employed you need to know what you need to claim for tax forms in order to qualify for a home loan. First-time home buyers who are self employed need a real estate financial expert to advise on what kind of income you need to show to quality and also speak with a CPA to deal with liability for showing that income.

 4. Shop around for a loan

When you work with a financial expert they will help you find the best lender for your loan. For example, our expert Renee works with Cornerstone Home Lending to help her clients find right loan. With Cornerstone’s systems, Renee inputs all the data into what’s called a pricing engine – for example: 5% down, condo, loan amount of $300,000, etc. From there you will see all the different choices of where to get that loan in order to get the best rate and terms based on your personal situation.

Here’s how shopping for a loan works. To get a mortgage loan you can go directly to a bank or you can go to a mortgage banker like Cornerstone. Cornerstone is a correspondent with the other lenders that offer these loans to homebuyers. Cornerstone sells their loans directly to Frannie Mae and Freddie Mac. The advantage to this is that they don’t have the overlays of some big banks. For example with Wells Fargo, even though Frannie Mae has approved 100% gifted funds with 5% down on a conventional home loan, Wells Fargo does not allow that. That means you can get more leniency without the stringent overlay when you choose a local mortgage banker instead of a big bank chain.

Doing your financial homework and finding the right mortgage is crucial to finding the right home and as long you have the right help, it’s a simple and easy process. That’s why First Team agents work with financial experts like Renee Wiginton, affiliated with the First Team Family of Companies, to help their clients get everything done right the first time. Call 888-870-1142 or email This email address is being protected from spambots. You need JavaScript enabled to view it. and we’ll connect you with an agent and financial expert to assist you.

Buyers – What’s your biggest concern when shopping for a mortgage loan?

Agents – What advice do you have for buyers searching for a mortgage?


Originally posted at: http://www.firstteam.com/blog/?p=8856

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