Planning

This is the beginning of your home buying journey. Some buyers spend months in this stage, some only weeks or days. Most prospective or soon-to-be home buyers spend this time familiarizing themselves with learning about available mortgage products, making sure they have everything ready to apply and qualify for a loan, and checking out different lender options.

We recommend checking out some of our other articles focused on the initial mortgage approval to better understand everything you can plan for to be ready to hit the ground running once you find that perfect home. 

Another feature that can be helpful at this stage is being able to see accurate Loan Options and follow how they change with the market. If you’re interested in learning more about your Loan Options try our interactive rates tool.

Pre-Approval & Shopping for your Home

At this stage, things are beginning to heat up in your home and mortgage search. Oftentimes, this is when soon-to-be buyers begin seriously considering a pre-approval with one, or a handful of lenders. Pre-approval requirements are not standardized and there is a wide range of criteria that is used to pre-approve borrowers. This should not be assumed to be 100% accurate of what the actual approval process will look like but is always good to begin at this stage. 

Some lenders do not require any credit check while some lenders offer what is known as a soft-pull. The most accurate pre-approvals are going to be tied to an official Tri-Merged Hard Credit Pull because this will represent your current mortgage FICO score that will determine your eligibility as well as the pricing and terms of your available mortgage options.

At Morty, we want you to have the most accurate representation of your eligibility, which is why we require a hard credit pull for your pre-approval. The great news is that a hard credit pull is active and valid for about 3 months leading up to your official mortgage application, so if you are within this timeframe it is a good thing to seriously consider. 

This is also the stage at which you will oftentimes start working with a real estate agent as you look more seriously at homes (although online digital options, as well as no realtor pathways, have started growing in prevalence recently). Realtors will typically require some version of a pre-approval and will recommend getting this from their preferred lender. This is always a good option to consider, but you do miss out on potentially finding the best loan options and programs by only considering one lending source! 

Making your Offer

Making an offer is a very exciting step, but can also be stressful due to competitive bidding processes and tight/high-pressure negotiations. 

Having a strong pre-approval (with hard credit pull) in hand going into this process is highly recommended at this stage. 

If you are working with a real estate agent or attorney then they will largely guide you through the offer and negotiation process. Make sure to pay attention to the terms of the offer, as they will likely end up in your contract and have a direct impact on your mortgage timeline. 

We recommend that you also involve your prospective mortgage provider at this stage as they can provide you with a fresh perspective on terms and conditions that may or may not be common or are unrealistic based upon the mortgage journey ahead! 

In Contract & Selecting your Mortgage Provider

Now things are real. You are officially in contract on your new home and the countdown has started. At this point, you should have a good idea of how long you have to finalize your mortgage process and get started on the official mortgage application. If you have been shopping for options across a group of lenders, now is the time to update your loan options, compare terms and make a final decision. We recommend that you don’t forget to consider all components of the mortgage transaction in addition to the price to make sure the next month or two go as smoothly as possible and you give yourself the highest chance for a smooth closing! 

A lot of times new homebuyers think that they need to finalize all mortgage terms and details, including locking in their rate at this point in time. This is not necessarily the case, as you can hold off on locking or making a final decision on the rate or term (30-year or 15-year fixed for example) until you get further along in the process. We do recommend seriously considering locking in your rate at this point.

Timing the market is largely a game of luck and you will want to reduce the number of things you need to focus on (closing is the most important). Once you lock in your rate you will still have flexibility in the interest rate or loan term, but this varies from lender to lender and is good to consider when evaluating options. Morty is a great resource for accomplishing this in one go.

Other things to consider when selecting a loan option

Rate vs Costs: You will have the option to choose a higher rate (higher monthly payment) with lower closing costs. Or a lower rate (lower monthly payment) with higher closing costs.

Rate Lock Period: You will want to make sure your rate is locked through your closing date. Rate lock periods are offered for 30, 45, 60, or 90 days. Longer rate lock periods typically have higher fees. As mentioned earlier, you do not have to lock in your rate right away so be sure to discuss your options with your loan officer before making a decision. 

Down Payment: You are able to put down as low as 3% as a first-time homebuyer and 5% if this will not be your first home. However, a smaller down payment means higher monthly payments

Loan Term: The shorter the loan term you choose, the higher your monthly payment will be.

Underwriting

Underwriting is one of the more open-ended and drawn-out processes of the entire mortgage process. 

Anything that the lender and underwriter needs or wants to see in order to approve you for your mortgage may come into play here. 

Luckily, we are here to guide you and answer any and all questions that you have. The more you do upfront during the application process and initial submission to underwriting, the better off you will be as we get further along in the process and closer to closing. 

Final Approval & Closing

You are days away from closing on your new home! At this point, you’ve chosen your lender, your rate is locked in, all requested verification documents have been either cleared or submitted to underwriting, appraisal, title, and HOI work have all been completed, and the lender is going to review everything for a final sign-off to officially approve you for your mortgage.

Final approval is really the culmination of all of the work you’ve done throughout your mortgage journey and you are one step closer to owning your new home. We will let you know as soon as we get the green light that you have been cleared to close.

What’s left to do now? Once our Clear-to-Close/Final approval is issued, your lender will work with your Settlement Agent and all other parties involved to finalize exact fees tied to both the mortgage and purchase of the new home and issue the final closing package ahead of your scheduled closing date.

At this step, please coordinate with your realtor/other parties to finalize your official closing time and date, review all numbers and ask any last-minute questions to your mortgage provider, wire your funds for your down payment and closing costs, and get your ID(s) ready to prove that you are you on the day of closing. Your settlement agent and realtors will be able to provide exact details on how to complete all of this, but your mortgage provider can also help! 

For the final step: get your keys and start moving into your new home. Congratulations! You have successfully completed your mortgage journey and closed on your new home. 

There is a lot more that goes on behind the scenes to get to this point, so make sure to read about the next article Behind the Scenes (below) to learn more about what Morty does to get you ready for the big day.