Getting ready to finance the purchase of your dream house in San Diego, CA? Let us walk you through the basics of getting a mortgage. For further assistance about mortgage financing in San Diego, CA, get in touch with our team.
MORTGAGE APPLICATIONS 101
The most basic truth about buying a home is that it involves a significant cache of money. Some buyers make all-cash payments, others obtain a mortgage loan. If it’s the latter route you’re taking, the first step you need to do is to lodge a mortgage application with your preferred lender.
Lenders use mortgage applications to determine two things about their clients: whether they can borrow money from their institution and how much. Which is why it’s imperative to submit complete and truthful information, from your personal data and financial history to details about the house you intend to buy.
Before applying for a loan, consider how much you can comfortably afford to repay along with your other expenses. To ensure that your resources won’t be spread too thin, pay more attention to what fits within your budget and income as opposed to how much you’re qualified to borrow. Don’t forget to take into account the loan size, type, terms, interest rates, and whether it has tricky elements such as a balloon payment clause and a prepayment penalty.
What do you need to prepare?
In addition to your personal information (and your co-borrower’s, if you have one), you will also need to prepare proof of income and financial statements before lodging your application.
Should you apply with the first lender you find?
The Consumer Financial Protection Bureau (CFPB) advises homebuyers to shop around and find three or more lenders to choose from. This allows you to survey your options and get the best possible rate.
How long does the application take?
The length of the application process ultimately depends on the lender as well as the information you submit. But we’ve observed that it usually takes anywhere between two to four weeks to apply for a mortgage.
When should you apply for a mortgage?
Consider starting your mortgage application even before you start the actual home search. If all goes well, you’ll be given a pre-approval letter which can help you set your final budget. Sellers also view pre-approved buyers better; it makes you look serious about the endeavor.
When you find the home you want to buy, you can complete the rest of the application.
KEY POINTS OF APPLYING FOR A MORTGAGE
- You will most likely need a copy of the Uniform Residential Loan Application (URLA/Form 1003): This is a standardized form by Fannie Mae that is used by most lenders in the country. The form is available in multiple languages including Spanish, English, and Filipino/Tagalog.
- Some lenders charge an application fee. Make sure to ask them if they charge one. The fee amount varies, but it can cost as much as $500. Some lenders let you add the application fee cost into the total amount if your loan gets approved.
- You may be asked questions about your sexual orientation and gender identity, as well as marital status. The former is to comply with anti-discrimination laws, while the latter is used by the lender to evaluate how to reach you in case you fail to repay your loan. You may contact the CFPB if you face discrimination issues during the application process.