Congratulations on your decision to buy a new home! Our goal is to provide you with knowledge and insight into the mortgage process so you can focus on finding your dream home. Here is some information that will keep you on track. If you have any questions that come up as you review this, you can call one of our Experts in Home Lending at (608) 833-2400.
First let’s start with the Do's and Don'ts.
- Do stay in your current job
- Do continue to make your mortgage or rent payments on time
- Do continue using your credit as normal and stay current on all existing accounts
- Do keep your same insurance company
- Do call us if you have any questions, at any time
- Don't make a major purchase (car, boat, jewelry, etc.)
- Don't apply for/open/close/max out any credit cards
- Don't change jobs without notifying us first
- Don't transfer any balances from one account to another
- Don't pay off any charge offs without discussing it with us first
- Don't pay off any collections without discussing it with us first
- Don't buy any furniture or appliances on credit
- Don't change bank accounts
- Don't consolidate debt onto 1 or 2 credit cards
- Don't take out a new loan or start home improvement projects
Easy steps to your new mortgage
Getting pre-qualified is the initial step in the mortgage process, and it's generally fairly simple. You supply us with your overall financial picture, including your debt, income and assets. After evaluating this information, we can give you an idea of the mortgage amount for which you qualify. Pre-qualification can be done easily over the phone or by applying online through our website, and there is no cost involved.
The initial pre-qualification step allows you to discuss any goals or needs you may have regarding your mortgage. At this point, we can explain your various mortgage options and recommend the type that might be best suited to your situation.
Because it's less involved, and based only on the information you provide, your pre-qualified amount is not a sure thing; it's just the amount for which you might expect to be approved. For this reason, a pre-qualified buyer does not carry the same weight as a pre-approved buyer who has been more thoroughly reviewed.
Getting pre-approved is the next step, and is more involved. You'll complete a mortgage application and then supply us with the necessary documentation to perform a review of your financial background and current credit rating. See our Mortgage Checklist for a list of commonly needed items. From this, we can tell you the specific mortgage amount for which you are approved. You'll also have a better idea of the interest rate. With pre-approval, you will receive a conditional commitment in writing, allowing you to look for a home at or below your approved price level. Obviously, this puts you at an advantage when dealing with a potential seller, as he or she will know you're one step closer to obtaining an actual mortgage.
The other advantage of completing both of these steps - pre-qualification and pre-approval - before you start to look for a home is that you'll know in advance how much you can afford. This way, you don't waste time with guessing or looking at properties that are beyond your means. Getting pre-approved for a mortgage also enables you to move quickly when you find the perfect place. When you make an offer, it won't be contingent on obtaining financing, which can save you valuable time. In a competitive market, this lets the seller know that your offer is serious - and could prevent you from losing out to another potential buyer who already has financing arranged.
Once you have found the right home for you and receive an accepted offer, we will fill in the appropriate details and your pre-approval will become a complete application.
3. Loan Commitment
The "loan commitment" will be issued to you when your loan has been approved. This means the home should be appraised at or above the sales price. More information may be required if the appraiser brings up anything he or she feels should be investigated (i.e. structural problems, accessibility issues, outstanding liens or litigation in progress). Your income and credit profile will be checked once again to ensure nothing has changed since the initial approval. You will also have set up home owner’s insurance on the property.
4. Loan Closing
At the loan closing, you will sign the new loan documents, including the closing statement, mortgage note, and truth-in-lending statement to name a few. Your down payment will be collected as well.
Then, you'll receive the keys to your new home!