Buying Your First Home And Understanding The Mortgage Loan Process
Buying a home is something a lot of people desire but the process can be daunting if you are just getting started. There are so many things to consider that it can be quite overwhelming at first. Many people get caught up in the process and make mistakes that can stay with them for the term of the loan or have to refinance later because it is the only way to fix the oversight. If you take your time and make sure you understand the process, buying a home and applying for your first mortgage does not have to be so hard.
Preapproved Does Not Mean Approved
Understanding that the process of getting preapproved is a basic first step is important. All too often people get preapproved only to find out later that it does not mean they already have the loan approval. The preapproval process seeks to qualify people for consideration, not actually determine if they will get a mortgage. The reason it is important is that it looks at things like your income, your past debt, and your potential ability to repay the loan that you may be given. It is not an in-depth look at your finances and credit history. Preapproval will give you a basic price range that your income would allow you to shop in and what the bank will give you if you qualify for the mortgage.
Lending and Alternative Lending sources
More often than not, if you are trying to get a loan for a home, you will apply for the mortgage through your bank if you have one that you use and are comfortable with. The bank is not the only place to get a mortgage but it is one of the most common lending sources available to most people. If you don't have a regular bank you use, you may want to consider other lenders like credit unions, mortgage companies, or private funding sources. Alternative lending sources are popping up more and more often these days with mortgage lenders that are preapproving and working with people online or through mobile applications. Check these sources out very carefully before you use them and make sure they are legitimate sources, not just someone looking to get access to your banking and personal information.
Be Prepared For Closing
A lot of things will happen very quickly as you go through the closing process and if this is a first mortgage you might not understand everything. If you are not clear on any part of the closing, take the time to ask what is happening, why it is happening, and if there are fees involved, ask what they are and why you are paying them. The old adage applies here. If you do not know what you are signing, ask before you sign. It is important to understand all the aspects of the mortgage process because you are going to be paying this loan back for 20 to 30 years. That is a long time to live with a mistake or oversight that could have been corrected if you just spoke up before signing that papers.