Our borrower’s guide breaks down the mortgage application process, so you can better understand what it takes to move from one phase to the next. Try not to get overwhelmed by it all! While there’s a lot of information required of you, you probably have most of these materials already. And with today’s wide range of loan programs, you may be better qualified to buy a home refinance than you think.
Timeline for Applying
Below is a general timeline for the mortgage lending process, from the time your application is submitted to the moment you get the keys to your new home.
While each application is unique, radius can provide qualified borrowers a loan commitment in as little as two weeks. To learn more about our “Fast Track” program, speak with one of our loan officers.
Click here to download a printable timeline.
Initial Meeting with a Loan Officer
When you first meet with one of our loan officers (a.k.a. LOs), you’ll be asked a series of questions about your employment, income, assets, debts and overall home financing goals. As your LO learns more about your finances and life plans, he or she will be able to determine which loan programs best match your needs. (You may be surprised by the different types of loan options available to you.)
If you already know the radius loan officer you plan to work with, feel free to contact him or her directly. However, you can learn more about our team by visiting our Loan Officers section.
Our loan officers are licensed to work beyond the office they’re affiliated with. For example, a radius loan officer who works in our Norwell office can finance loans throughout Massachusetts, and possibly other states we service.
Check out our “Time to Apply” section, which outlines which documents and other information you’ll be asked to provide after meeting with a radius LO.
Once you’ve decided that you’re really ready to buy a home, the first thing you should do is get pre-qualified*. A pre-qualification from a reputable mortgage lender establishes how much you can reasonably spend on a mortgage and confirms that you’re qualified to apply for a loan up to that amount.
A pre-qualification also documents:
- the details of your investment, including down payment and closing costs
- a close estimate of your monthly principal, interest, taxes and insurance (PITI) fees
- loan options you qualify for and fit your specific needs
Getting a pre-qualification before you actively start looking for a home is best. When you’ve found the one you want, you’ll be ready to make a real, solid offer. Also, sellers will be more inclined to accept your offer knowing you’ve been carefully reviewed by a lender and that you qualify for a loan.
*Remember: Pre-approvals and pre-qualifications are not the same. Pre-qualifications don’t require a thorough credit check and have minimal impact on your true borrowing ability.
Time to Apply
Once you’ve made an offer that the seller has accepted, it’s time to officially apply for a loan. You’ll need to give your loan officer the following information:
- Your home address for the past two years and the length of time you’ve lived there
- If you rent, your landlord’s name and address
- Names and addresses of your employers for the past two years and the dates you worked at each
- An explanation for any gaps in employment
Outstanding Loans and Credit
- All creditors’ names and addresses
- All related information, including account numbers, monthly payments, total balances and months left to pay
Savings, Checking and Investment Accounts
- Names and addresses of all financial institution to which you belong, along with account numbers and current balances/values at each
- Address and estimated market value of all real estate you own
- Names and addresses of any and all mortgage companies, account number(s), and outstanding loan balances
- Monthly payments (including taxes, insurance and homeowner association dues, if applicable)
- Any monthly rental income you receive
- Net cash value of life insurance policies
- Make, year and value of your automobiles
- Value of your furniture, jewelry and other personal property
Other Required Documents
You’ll also need to provide the following documents:
- Purchase contract* (for the purchase of your new home)
- Sales contract* (if you are selling your present home)
- Certified copy of the closing statement* (if you’ve already sold your home)
- All original pay stubs for the last 30 days of employment (showing your year-to-date earnings, name and social security number)
- Original copies of W-2 forms for the past two years
- If you are self-employed or receive a 1099 form, your most recent two years’ signed and dated tax returns with all schedules; year-to-date profit and loss statement; and balance sheet
- If you receive commissions, the most recent two years’ signed and dated tax returns with all schedules and year-to-date employee business expenses
- Original bank statements of all accounts for the past two months
- If you own a rental property, the most recent two years’ signed and dated tax returns with all schedules, and the current rental agreement
- If divorced, marital termination agreement and final decree (signed by the court)
- Copy of the driver’s license and social security card (for FHA loans only)
- Original certificate of eligibility and DD-214 (VA loans only)
After Completing the Application
Once we have all your application materials, we’ll begin to carefully review your documents. It’s quite typical for one of our underwriters to contact you and request additional information. Make sure to respond as quickly as possible to avoid confusion and delays.
In the meantime
- An appraisal will be scheduled to assess your current home’s overall condition and to verify its title.
- A federal truth in lending disclosure, which outlines the total cost of your loan, will be mailed to you shortly. This form includes a lot of figures and can be confusing, so please don’t hesitate to call your loan officer with questions or concerns.
REMEMBER: The mortgage process has changed quite a bit in recent years, requiring more financial, employment and credit documentation than ever before. Don’t take it personally or worry that your application is in jeopardy. It’s simply part of today’s process.
- A second credit report will be pulled just before closing, so we strongly encourage you to not open any new credit cards or loans before then. If that’s not possible, you’ll need to provide documentation on any new accounts, and a conference call with the credit bureau will most likely be required. Consequently, it’s best to avoid opening new credit if at all possible.
- If you do acquire new debt during this time, you may alter your debt-to-income ratio, which can negatively impact your borrowing ability.
Within two days of the closing, you’ll do a final walk-through of the property to make sure it’s in the same condition as when you first made the offer. Doing the walk-through right before the purchase is highly recommended in case circumstances have changed (i.e., a tree has fallen or the water tank is leaking). Remember, there’s no recourse if something goes wrong after the closing.
Your attorney or the closing attorney will let you know about funds you’ll need for the closing. You’ll also receive a HUD Settlement Statement with these itemizations about 24 hours prior to closing. Keep in mind that your lender’s estimate of closing costs does not include your adjustments with the seller to cover pre-paid costs for insurance and taxes, which can add several thousand dollars to the amount you’ll need.
Below is an overview of the types of closing costs you may incur on your loan. Some are one-time fees while others recur over the life of the loan.
Often called “points”, a loan discount is an optional, one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan.
A one-time charge for an appraisal, which documents the value of a particular property, is made by an independent fee appraiser, and is required on most loans.
Credit Report Fee
A one-time fee to generate a credit report, which is processed by an independent credit reporting agency.
Title Insurance Fees
There are two title policies that protect parties from loss due to a defect in the title. The first is an optional buyer’s title policy that protects the new homeowner; the second is a required lender’s title policy to protect the lender. Both are one-time fees.
Miscellaneous Title Charges
The title company may charge one-time fees for a title search, title examination, document preparation, notary fees, recording fees and a settlement or closing fee.
Document Preparation Fee
There may be a separate, one-time fee covering preparation of the final legal papers, including the note and deed of trust.
This is the amount of interest you owe on your first monthly mortgage payment. Depending on the day of the month your loan closes, this charge may vary from a full month’s interest to just a few days.
Mortgage Insurance (MI)
Depending on the amount of your down payment, you may be required to pay a monthly fee for mortgage insurance (which protects the lender against loss due to foreclosure). You may also be required to put a certain amount into a special reserve account (called an impound account), which is held by the lender.
Taxes and Hazard Insurance
Depending on the time of month you close, property taxes will be pro-rated between you and the seller. You’ll also need to pay an entire year’s hazard insurance (a.k.a. homeowner’s insurance) upfront. In addition, you may be required to put a certain amount for taxes and insurance into a special reserve account (escrow account), which is held by the lender.
At the actual closing, with counsel present, the buyer and seller will sign all the required documents to complete the transaction. Within hours of the closing (if not immediately after), the closing attorney will record the deed to your home at the Registry of Deeds. Meanwhile, the seller receives their proceeds check and you receive the keys to your new home. CONGRATULATIONS!