Mortgage Basics: What You Should Know Before You Finance a Home

First-time homeowners often have a lot of questions. The process of financing and purchasing your first home can be long and tedious, so having questions is only natural. Given the complex legal aspects of financing your next home, it’s also vital that you understand what you’re getting into and resolve any misunderstandings before you sign on the dotted line. 

Unfortunately, finding solid tips on taking out a mortgage can be challenging. After all, you’ve likely heard that you shouldn’t believe everything you read on the internet – and it’s true. To help you get a better understanding of the mortgage process, we’ve researched and compiled essential information on taking out your first mortgage. If you need more information, check out this blog post about reverse mortgage canada rates.

What Is a Mortgage, And How Do I Apply? 

Most people looking to buy a home understand that a mortgage, at its core, is a home loan. Each mortgage is different, and the terms, details, and fees associated with each mortgage vary from buyer to buyer so you may want to learn about our home loan types first at Orange Mortgage & Finance Brokers. However, there are a few themes that remain consistent throughout the borrowing and closing process. 

Mortgages with Mr. Cooper® and other lenders have consistent requirements that you need to meet. For instance, prior to applying for a mortgage, you’ll want to check your credit score. Ultimately, your credit score is a rating you receive based on multiple lending and borrowing factors. These scores look at how much money you’ve borrowed, if you’ve made on-time payments towards debts, etc. Your credit score is an important deciding factor in whether you’ll be eligible to receive a loan, so it’s important to check it before you apply. 

Thankfully, there are plenty of free tools that you can take advantage of to monitor and improve your credit score. Sites such as Experian® and Credit Karma® allow you to check your score for free. Once you’ve got a handle on your credit score, you’ll want to start saving for a down payment on your home. 

Once you’ve saved enough for a down payment, you may want to consider getting pre-qualified. Pre-qualification allows you to know your borrowing limits before shopping for your potential home. It enables you to shop for houses within your buying range and helps you to determine what purchasing power you have on the market. 

I’ve Been Pre-Qualified and Found a Home, Now What? 

Getting approved and finding the home of your dreams is likely the most exciting part of the buying process for most homeowners. However, finding your perfect home is most certainly not the last step. 

Once you’ve found your dream home, you’ll go through a variety of stages during the home loan approval process, all the way to the closing on your new home. You’ll need to purchase homeowner’s insurance early during the process as this will be needed by your lender. For your protection, you may want to have the property inspected by professionals to insure there are no hidden surprises after closing. 

Closing on your house also comes with fees, often referred to as closing costs. There are multiple fees associated with the closing process. Typically, you’ll pay closing fees that add up to anywhere from 2% to 5% of your total loan. Mr. Cooper® mortgage professionals will review these fees with you after carefully determining the exact fees associated with your loan. 

Additionally, you may want an attorney present to close on your home. Some states require a closing attorney to perform the actual closing and signing of documents. Many borrowers find that having an attorney present to be beneficial, should any questions arise regarding the closing process or documents. 

The buyer and seller will agree on a closing date for the home per the signed purchase contract, contingent upon the completion of any pre-closing requirements. On this date, all involved parties meet to sign the official documentation.

Obviously, each lending process has different requirements, and the timeline for closing on a home is different for everyone. Therefore, it’s important to speak with your realtor, attorney, lender, and all other involved parties to ensure you have an in-depth understanding of the expectations during each step of the process.