What is Involved in Obtaining a Mortgage?

The process of obtaining a mortgage is the most thorough review of your income, assets and credit. After all, you are seeking to borrow thousands of dollars to purchase or refinance your home. It is important that all aspects of your financial condition are reviewed to satisfy the needs of the lender and to ensure the loan is suitable for you. In a purchase transaction the process begins prior to even looking for a home. It is always best to become pre-qualified or pre-approved. This ensures that the home buying process runs smoothly. Your second step will be to start looking for a home. The best way to find a new home is to contact a Realtor, and retain them as your Buyer Representative or Buyer Agent. You are now their client. They will review you finances with you and look for homes in your price range. They will also discuss any special needs you may have. Once a Buyer Agent finds you the right home, they will help you structure a purchase offer for the home. The agent of the seller cannot assist you with making the offer, they can only present it to the seller. It is time to complete your mortgage application. The specifics of the property are added and you begin the process of appraisal and final underwriting. This results in a Commitment Letter. The Commitment Letter is the lender's promise to provide financing for the home under the provisions of the commitment. (See the Glossary)

You will also complete your home inspection. Once the property inspections are completed, you will review and sign the purchase contract with your attorney. It is important that you provide your attorney with a copy of the binder so he or she can incorporate all conditions of the binder into the contract. They will also order a title search and title insurance to ensure that you have clear a marketable title. Once all parties have completed their work, it is time for a closing. At the closing the seller turns the property over to the buyer. You sign the mortgage and the note and give the proceeds of the loan and your down payment to the seller. They give you the keys. Any final adjustments are completed. Taxes are paid and/or put into escrow.