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Loan Process

STEP 1 – BUDGET

A good rule of thumb before making a purchase or refinancing you home is to consider your budget. These steps below can help you calculate your budget.

1. Estimate
Determining a monthly payment you can afford will help you determine your home buying power or the amount of cash out in a refinance.

2. Understand Your Payment – PITI
Your payments will typically include Principal, Interest, Tax, and Insurance (PITI). With an array of loan options to choose from, one of our Loan Originator’s can help guide you to the best loan option for your scenario. In a fixed loan option, principal and interest will remain the same but taxes and insurance can increase or decrease but most often increase over time. Anticipating these increases ahead of time will give you peace of mind when they occur.

3. Ongoing Housing Costs
Not all homes are equal. Some homes will require a lot of maintenance and upgrading while others may require a light bulb change once in a while. Having proper expectations and planning accordingly will help you make a sound financial decision when considering a property. In addition, understanding the local utilities and cost associated are key things to think about when budgeting.

4. What You Can Afford
Compartmentalizing all your expenses and having a good understanding of your budget will be crucial down the road when you search for homes or consider a cash out refinance. If doing a rate and term refinance, the sole outcome should be a sizable monthly savings. In some cases, a cash out refinance can also result in a monthly savings by consolidating our debts. One of our Loan Originator’s can help evaluate your options.

PURCHASING

Are you wanting to purchase a home?

This is an exciting time, and we would like to help make the loan process as seamless as possible. There’s a difference on what you can afford and what you can get approved for.

Establishing your budget is an important first step, and the next step is to get pre-approved by one of our Loan Originator’s. This is a process of determining how much you can be eligible to borrow so you can understand your purchasing power.

Once you’re pre-approved, you can start looking at homes with your realtor. Once you find a home, make an offer, and it gets accepted, we will start to process your loan.

REFINANCING (RATE-AND-TERM AND CASH OUT)

Are you wanting to refinance your home?

Rate and term refinancing is when you replace your existing mortgage with a new mortgage that has a lower interest rate. You can also change the term of your mortgage. If you want to pay off your mortgage faster along with reducing the total amount of interest you pay, you can refinance into a shorter loan. This won’t change the amount you owe since it’s likely the refinance will add some closing cost and the new loan amount would increase.

Now is a great time to talk with one of our Loan Originator’s to determine your potential savings or strategy to pay off your loan faster.

Cash out refinancing can potentially be an option. It allows borrowers to tap into the equity in their home. Typically, lenders cap the amount you can borrow at 80 percent of the equity you have in your home, minus any other existing loans. Some loan options may allow higher exceptions.

A cash out refinance may make sense for homeowners looking to utilize their equity for a variety of options; debt consolidations, home improvements, college, investment opportunities, large purchases, or emergency funds.

In many cases a cash out refinance may result in a higher monthly payment but is subject to rates and qualifications. We often see monthly savings when consolidating other debts. Your Mortgage Loan Originator can help you determine these calculations and best options for you to consider.

As a result of refinancing, your total finance charges may be higher over the life of the loan.

 
 

PROCESS OF THE LOAN

  1. COMPLETE THE APPLICATIONS (PURCHASE & REFINANCE)
  2. QUALIFICATION (PURCHASE & REFINANCE)
  3. SHOP FOR YOUR HOME AND MAKE AN OFFER (PURCHASE ONLY)
  4. HAVE THE HOME APPRAISED (PURCHASE & REFINANCE)
  5. MORTGAGE PROCESSING AND UNDERWRITING (PURCHASE & REFINANCE)
  6. FINAL LOAN APPROVAL (PURCHASE & REFINANCE)
  7. LOAN SIGNING (PURCHASE & REFINANCE)
  8. CLOSING DAY (CONGRATULATIONS!!) (PURCHASE & REFINANCE)

To view the cycle of purchasing a home click here.