Key Steps to Getting a Home Loan

Whether you are buying your first home, refinancing a home or purchasing an investment property, understanding the process of getting a home loan will make things go smoother for you, the seller and your real estate agent. 

Here is what you need to know about buying and refinancing a home. 

During the process of home buying, you may find you have a lot of questions. Carrington Mortgage is here to help you every step of the way. Whether you are a first-time buyer or have already been through this process before.

Here is a step by step guide on what to expect when buying a home.

1. Check Out Your Finances

Take a look at your credit score. The 3 credit bureaus have to give you a free credit report once a year. Take advantage of that. If there are any issues you may want to consider clearing them up before applying for a mortgage. Think about how much of a down payment you can afford. Calculate your monthly obligations. Knowing this will help you to get pre-qualified.

2. Get Pre-qualified

Carrington will request income, asset, liabilities and other information in order to pre-qualify you for a loan. We will provide you with loan options and help you decide what loan is the best fit for you.  When you're pre-qualified you'll know how much home you can afford. Our mortgage affordability calculator can also help you figure out how much you may be able to afford.

3. House Hunting

Once you determine what you can afford, you can begin searching for homes that fit your budget and meets your needs. Make sure you factor in commute time, neighborhood demographics, distance from shopping, school districts and the potential future value of the home when looking for a home. Make a list of must-have and nice-to-have features for your new home when shopping.

4. Make an Offer

Now that you've found the perfect home, you need to make an offer. Do your research to figure out what a fair price is.  A qualified real estate agent should be able to help you do this.  If there is an abundance of home inventory this is considered a buyer’s market, giving you a little more negotiating power. Low inventory or a desirable neighborhood or if there are multiple offers on a house means you're in a seller’s market. You maybe want to consider a stronger offer in this case. After considering some of these factors, submit an offer.

5. Due Diligence

When your offer has been accepted, you will want to have a professional perform a home inspection. If a problem is discovered before closing, you can go back to the seller and negotiate repairs. If you forgo an inspection and a problem arises it will be your responsibility.

6. Home Financing

Now you need to get a loan.

7. Escrow and Closing

What happens here. When all the conditions of the loan have been met, you will be ready to close your loan. Expect to meet with agents, attorneys, and title officer. Review your loan documents and sign if they are satisfactory. After all the paperwork is complete and funds are distributed, you will become a homeowner.

8. Congratulations, You're a Homeowner!

Grab the keys to your new home and celebrate!

You will also need to get homeowners insurance. This protects you in the event there is a fire, natural disaster, or other unforeseen events. You will have peace of mind once you have a homeowners insurance policy. Don’t forget to set a date to have your utilities set up!

Have you ever considered refinancing your mortgage? Refinancing can be a great option if interest rates have gone down or changing the terms of your loan is beneficial. Maybe the rates have not changed but your credit score is higher, putting you in a better position for a new rate.

Debt consolidation can also be a great reason to refinance to eliminate other debt, such as credit card or personal debt, with higher interest rates. Whatever your needs may be, talk to one of our Carrington Mortgage Professionals to discuss your options. In the meantime, here is what you can expect when refinancing your mortgage.

1. Gather Your Finances                                                                                   

Once you have decided refinancing is the best option for you, review your finances and check out your credit score. Talk to our Mortgage Professionals about getting pre-qualified and what information is required. Once the information is provided, we can discuss all of your loan options. 

2. Find the Right Loan

There are several types of loans to consider.

  • FHA loan (Federal Housing Administration) offers many options including rate/term and cash-out refinances and our 203k program, also referred to as a rehab loan and is a good option for fixer uppers. The program offers borrowers a simpler way to refinance with less paperwork.  
  • USDA refinance (United States Department of Agriculture) offer flexible eligibility requirements and quick closing. Refinancing your USDA loan may give you access to lower rates and in turn reduce your monthly payment.  
  • Cash out refinances are used to replace you existing loan with a larger one to get cash. This may be a good option for those looking to pay off credit card debt or for home improvements.
  • Cash in refinances would suit someone who owes more on their mortgage than their home is worth, to get a better rate on a jumbo mortgage, or those looking to get a lower payment by getting rid of their mortgage insurance. This type of refinance requires you to bring money to your closing.
  • VA refinance loans are available to current or retired military homeowners and to spouses of deceased military members. The VA offers cash-out options for home repairs or paying off debt.  Another option is an Interest Rate Reduction Refinance option (IRRRL) loan that offers substantial savings by lowering the interest rate

3. Order an Appraisal

After you completed your loan application and indicated your intent to proceed with the loan, you will need to get your home appraised. The lender will order an appraiser to conduct and evaluate the value of your home at your earliest convenience. This will be used to determine if the value of the home makes sense for your new loan. If the appraiser values your home at less than you expected, you may need to change the terms of your loan. Certain types of loans may not require an appraisal, such as the VA IRRRL and the USDA Streamline Assist refi.

4. Processing Your Refinance

At this point, you will be required to submit documentation regarding your income, assets, and liabilities. These included W-2’s, Tax returns, Bank statements and other documents to verify your ability to repay the loan. An Underwriter will review your documentation and validate you meet the requirements for the loan product you chose. During this time, our Mortgage Professionals will be there to guide you through the process and answer any questions you may have.

5. Closing Your Loan

Once you have complete all of the Underwriting conditions associated with your loan, you will have to sign your closing documents. You will sign these typically at the office of a title or escrow agent or at an attorney's office. Once you have signed all the documents, your previous loan will be paid off and your new loan terms begin. If you chose to pay off other debts or receive cash, funds will be disbursed at this time. You will receive a copy of the closing documents and the new mortgage will be recorded.