A Complete Mortgage Guide for Home Buyers

We’ve created this mortgage guide for home buyers to help you understand every aspect of the mortgage process. Don’t miss out on this guide.

Whether someone is buying a home for their first time or their tenth time, there’s still a lengthy process to go through.

Especially if a mortgage is needed.

But getting a mortgage isn’t a simple process. There are a lot of steps — and without the right information, the process could get tricky. Or, a costly mistake could be made.

Here’s a mortgage guide to help home buyers navigate this tricky process.

A Mortgage Guide is Not The Only Resource

Buying a home is stressful. The more support provided, the easier the process.

Let’s jump into our mortgage guide. First, we’ll discuss the professionals involved in the home buying process:

Loan Officer

A loan officer specializes in mortgages. So, they are a great resource for anyone who needs more information about the loan process.

A loan officer uses the following information to check if a client is qualified for a mortgage:

• Credit
• Financial
• Employment

Loan Processor

The loan processor prepares the mortgage loan information and application. They then send all the paperwork to the underwriter. Before that, the loan processor will ask the client for the following information:

• Proof of Income
• Proof of Employment
• Monthly Bills
• Current Bank Statement

Mortgage Underwriter

Based on the information the loan processor provides, the mortgage underwriter will either approve or reject the mortgage loan. Once approved, finding the right home based on the financial numbers becomes easier. Now, a real estate agent is needed.

Real Estate Agent

A real estate agent helps buyers find the right home for them based on a variety of criteria. It’s important to find a good real estate agent who knows the area, understands the buying process, and is trustworthy.

A real estate agent will then find homes based on a client’s criteria such as:

• Financial situation
• Neighborhood
• Schools
• Proximity to Shopping and other attractions
• Tax situation

Real Estate Appraiser

A real estate appraiser. This person has the education, training, and experience to accurately estimate the true value of a home.

The value of a home is based on criteria such as:

• Similar homes in the neighborhood
• Condition of home and property

Home Inspector

No mortgage guide would be complete without the home inspector being included. It is so important to hire a home inspector before purchasing a home.

A home inspectors job is to evaluate the current condition of a home. They are trained to find things wrong with a home that could have serious ramifications if they are ignored.

These include things like the roof needing repairs. Or if carbon monoxide is secretly leaking out from somewhere. What someone doesn’t know can definitely make them unsafe in their own home. Or, they make you have to shell out additional money for costly home repairs.

Mortgage Lender

The mortgage lender is the financial institution providing the funds for the mortgage. They are also responsible for collecting the ongoing mortgage payments.

A good mortgage guide must share that the mortgage lender is the person to contact if a situation becomes too difficult. They can help a homeowner sell or stay in their home should finances become strained.

Closing Representative

A closing representative deals with signing all the final documents like the mortgage itself or the deed to trust. They also distribute the money to all individuals and/or corporations.

At the end of the signing, keys are given to the new homeowners and they can move into their new home. Before they must:

• Provide proof of insurance
• Provide proof of inspections
• Pay any money still due

Community Organization and Local Counseling Agencies

A mortgage guide should also contain other resources besides real estate agents and mortgage lenders because there are other ways to find support. They can help with:

• Financial assessment
• Ways to improve credit
• Identifying local government sponsored down payment and closing cost assistance

These organizations like HUD can also help with financial literacy. Most of these services are free or low cost.

Choose a Mortgage Loan

Choosing what type of mortgage to get can be a complicated and overwhelming process.

That’s why getting support is so helpful. Because there’s a lot more to choosing a loan besides deciding between a 15-year and a 30-year loan.

Government vs. Private

Every mortgage guide should explain that there are three types of government loans.

Each loan has its advantages and disadvantages. A private or conventional loan is not backed by the government. The following are backed to insure the lender in case the borrower defaults on the loan:

FHA

FHA loans are available to all buyers. The program also allows a buyer to make a down payment for as low as 3.5% of the purchase price. But mortgage insurance also must be taken out, increasing the size of monthly payments.

VA

The US Department of Veterans Affairs (VA) offers loans to members of the military and their families. One huge advantage to this program is that a borrower can receive 100% financing to purchase a home. No down payment is necessary.

USDA/RHA

Managed by the Rural Housing Service (RHS), this loan is offered to rural residents with steady, low or modest incomes that haven’t been able to qualify for decent housing through conventional methods. Income must not be higher than 115% of the adjusted area median income.

Fixed vs. Adjustable

A fixed rate is just that — fixed. This means that both the interest rate and the monthly payments will stay the same for the entire duration of the loan.

An adjustable rate’s interest rates will change. They usually do so every year. Meaning payments may rise or fall according to interest rates.

Jumbo vs. Conforming

These types of loans are based on the size of the loan.

Conforming

A conforming loan meets the underwriting guidelines of Fannie Mae or Freddie Mac. These corporations are government controlled that purchase and sell mortgage-backed securities. The loan must conform to their maximum size limits and other pre-established criteria.

Jumbo

A jumbo loan actually exceeds the conforming limit. It’s a higher risk for the lender because of its large size. To obtain this loan a borrower must have excellent credit and make larger down payments.

While a mortgage guide can help you, we’re happy to talk to you through every step of your home buying process. Ready to buy? We’ve got the latest mortgage rates.