While the mortgage loan process may take anywhere from three to five months (or longer, if you’re hooked on touring open houses), it’s helpful to know what to expect from each leg of this complex yet rewarding adventure. From creating a budget to perfecting your credit score to finally closing the loan, here’s everything you need to know about the steps that will eventually lead you to owning your own home.
Creating a Budget – Two Weeks
Whether your idea of the perfect home is a beachfront condo or a single-family home in the suburbs, be sure you create a budget before you fall in love with something you can’t afford. While you probably won’t be working with a trusted mortgage lender yet, take time to do some solo research on the types of mortgages available, which will help determine your budget.
Perfecting Your Credit Score – Three Weeks
One factor that may affect the type of loan you are qualified for, and essentially your budget, is your credit. Well before you work with a lender, give yourself the upper hand by using a tool like ScoreMaster to achieve your best credit score within 20 days. By providing a clear course of action through a gamified dashboard, and educating users about their credit, ScoreMaster effectively increases your chances of being approved for better-quality loans.
Finding Your Dream Home – Three to Eight Weeks
While it may take longer for some, it’s not uncommon to find your dream realtor and your dream home in a matter of three to eight weeks. With so many realtor sites online these days, you could easily find a realtor in a day or so with a simple click of a button. But try not to be too hasty. By taking the time to conduct research, coming up with smart questions for potential agents, and checking out their customer reviews, you’re sure to find an ally who will stop at nothing to get you into the home of your dreams. Once you’re teamed up, make a list of all the important factors — from the number of bedrooms you’d like to the ideal neighborhood — and put your realtor to work. Browse listings online, set up house viewings, and find your ultimate home.
Making an Offer – Three to Five Days
Once you’ve found a home you love, it’s time to make an offer. Your real estate agent will assemble the necessary documents, and then you’ll wait for the seller to accept, decline, or negotiate with a counteroffer. Keep in mind that this process may be fast if the home is a foreclosure or if it has been on the market for a while, or it may be very slow if there is a lot of competition. It’s not a bad idea to keep browsing, just in case your dream home has multiple suitors.
Working with a Trusted Mortgage Lender – Five to Six Weeks
Similar to conducting research before you choose a real estate agent, you’ll want to take some time to secure the right mortgage lender. Be sure to come armed with questions to ask your potential lender, who should be ready to educate you on the types of loans available and give you an estimate of how much the total loan will cost after fees. Once you find the right lender, they’ll grant you a pre-approval letter to share with your seller, and if they accept your offer, you’ll begin the loan application process. This will include a home inspection and appraisal, which are crucial to determining the value of the home and getting approved for a loan. To help you understand the loan process better before you sign the dotted line, check out this guide to mortgages.
Closing the Loan – Two to Four Weeks
Once the appraisal is complete, your lender will complete mortgage underwriting, which includes verifying your income, assets, and debt. Once cleared for closing, you’ll be provided a closing disclosure, which is a document that summarizes the terms of your loan and what exact costs you’ll pay at closing. You will have at least three days to review this document. Once reviewed, your mortgage lender will fund the mortgage loan by wiring the funds to the title company to close on the home loan. While delays in the mortgage process timeline do happen, they can be avoided by being a cooperative borrower and supplying requested documents in a timely manner.
Learn more about how ScoreMaster can help prepare you for the mortgage loan process.
*Legal Disclaimer – ScoreMaster is a patent-pending educational feature simulating credit utilization’s effect on credit scores via payments or spending. Your results may vary and are not guaranteed.