The mortgage loan process: A checklist for understanding each step

• Get pre-qualified to determine your budget

  Start by assessing your financial situation, taking into account your income, existing debts, and the amount you can comfortably set aside as a down payment. Keep your homebuying budget realistic—it’s crucial not to stretch beyond your means.

  One way to help determine your budget is to get pre-qualified. Pre-qualification is an informal optional step in the mortgage loan process meant to help you decide if you’d like to move forward with a loan application.

  Our mortgage pre-qualification calculator will look at several factors, indicate whether you meet the minimum requirements for a home loan, and tell you the maximum estimated home purchase price you would pre-qualify to borrow. It will also provide an attainable monthly payment amount based on the information you provide. A loan officer may also be able to give you a ballpark figure over the phone if you would rather reach out to them directly.

• Apply for a home loan and get pre-approved

  It’s best not to wait until you’re ready to buy a home to get pre-approved for a mortgage. Pre-approval helps you find a price range for your home search and can guide you on how much to save for a down payment.

  During the pre-approval step of the mortgage loan process, you’ll have the opportunity to meet with your local lending team in person or over the phone. This process involves sharing personal and financial information and consenting to a credit check. Your loan officer will let you know what’s needed for your loan application, such as proof of income, tax returns and asset statements.

  At this time, you’ll learn about the types of home loans. Keep in mind that there’s no such thing as a one-size-fits-all loan. Different people have different financial situations. Having an expert in your corner to explain the best loan that accommodates your situation can help pair you with a loan you will be comfortable with over the long term.

  Because the mortgage pre-approval process includes submitting a loan application and securing home financing, it can accelerate the closing process. In addition, while a pre-approval letter doesn’t guarantee a home loan, it can make negotiations easier because it shows the seller that you’re a serious buyer.

• Lock in your rate

  Mortgage interest rates can fluctuate depending on the economy and other factors. At some point in the mortgage loan process, you will want to lock in your rate, but that rate can expire before your offer is accepted. If you’re looking to secure your interest rate for enough time to find the perfect home, the Lock & Shop program allows you to lock in your interest rate for up to 120 days* without having a specific property in mind. The Lock & Shop program offers these five benefits:

  1. Interest rate protection: The program protects you from potential rate increases during your home search, ensuring you secure the locked in rate.
  2. Rate float-down option: If market rates decrease during the lock period, you can use the one-time float-down option to take advantage of the lower rates.
  3. Increased flexibility: The program allows you to search for your ideal home without the pressure of making a quick purchase decision due to fluctuating mortgage rates.
  4. Various loan programs eligible: The Lock & Shop program is available for conventional, FHA, and VA conforming loan programs for primary and secondary homes, providing various financing options.**
  5. No property address required: You can lock in your rate without having a specific property in mind, giving you the freedom to shop around for the perfect home.
• Find a home and make an offer

  As a homebuyer, it’s wise to surround yourself with experts. Hiring a real estate agent offers several benefits, including understanding what to look for when viewing homes and neighborhoods. They can quickly identify red flags and are experienced in writing winning real estate offers once you find the right home.

  They will also coordinate with a team of professionals such as inspectors, title companies and your loan officer to ensure the homebuying process goes smoothly. Lastly, your agent will negotiate the contract and terms of the sale within your budget.

  During this time, you may be able to negotiate seller credit for a temporary rate buydown. Buydowns can be a great way to save money on your mortgage and make homeownership more attainable in higher-rate environments. Mortgages with temporary buydown options have lower initial payments with a temporarily reduced interest rate. Temporary buydowns offer a reduced rate on a home loan for one, two or three years in exchange for a cash deposit from a builder, lender or seller.*

  Eligible homebuyers can also save with our Payment Advantage program options. This program lowers your monthly payment for the first few years on a conventional mortgage. Payment Advantage will lower your payment for the first year by paying 1% of your interest rate for year one of your mortgage. With Payment Advantage Plus, your monthly payment is lowered 2% for the first year by the seller and 1% the second year by us.

• Review your home appraisal and inspection reports

  Shortly after your purchase agreement is signed, your loan officer will let the appraisal desk know when to order a home appraisal (when applicable). An appraisal evaluates a property’s fair market value and determines if a home’s sale price and the loan amount you requested are appropriate. The appraisal report is sent directly to your lender. Your loan then moves on to the underwriters, finalizing all of the figures and determining whether your loan is clear to close.

  An appraisal isn’t a replacement for a thorough home inspection. A home inspector provides a report that you can use to request repairs, renegotiate your offer or help you budget for maintenance down the line.

• Stand by during processing and underwriting

  Once your mortgage loan application is submitted, your local lending team will make sure all the proper documentation has been gathered and is ready to move to processing. They help prep your mortgage application to ensure that everything is accurate for your loan disclosures.

  After a loan processor assembles and verifies your documentation and creates a loan file, the underwriter will do an in-depth review of your loan package, finalizing all of the figures and determining whether or not the loan is clear to close. Generally, your credit history, assets, employment status, income and current debts are evaluated along with the value and condition of your purchase property.

  Following underwriting, you may be approved with conditions. Approved with conditions is just a formal way of saying you need to answer some questions or provide additional documentation for your loan to be submitted for final approval. For example, you might need to explain a recent withdrawal from your bank account or give a copy of your homeowners’ insurance. Your responsibility during this stage is to respond quickly when additional information is requested to help keep the mortgage loan process on schedule.

• Attend closing

  After the underwriter issues final approval, your loan officer will schedule your closing appointment. All of your paperwork will be ready to sign, including legally binding documents such as your Closing Disclosure and promissory note, the mortgage or deed of trust and the deed.

  During closing, you’ll pay your down payment and closing costs and make an initial deposit in your mortgage escrow account. At this time, you’ll also need to show proof of homeowners insurance. With closing finalized, the transfer of ownership occurs, and you’ll likely be handed the keys to your new home.

• Begin monthly mortgage payments

  Congratulations, you’re a homeowner! Now it’s time to start making those regular monthly mortgage payments to the mortgage servicer that provides customer support, manages your payments and handles your escrow account, if you have one. Often, mortgage lenders sell your loan to another organization for servicing, so your mortgage lender and mortgage servicer are separate entities.

  At Guild Mortgage, we lend and service the majority of the loans that we originate in-house. That means that we’re your loan partner throughout the life of the loan. We care about helping you achieve homeownership and are there with you when you move to a new home, refinance your current mortgage, renovate your home or need mortgage help programs and assistance.

• Determine the best time to refinance

  Refinancing can help you save on interest and lower your monthly mortgage payments. How soon can you refinance after buying a home? If you find that mortgage rates drop as you settle into your new neighborhood, you can potentially refinance in as little as six months.

  While timing is subject to specific loan program guidelines, the best time to refinance a mortgage depends on your financial situation and reasons for refinancing. Some borrowers review their mortgage once a year or when interest rates drop to check whether a refinance would be beneficial. If you’re considering refinancing, it’s a good idea first to calculate how much it can change your payment and when you’ll reach the break-even point. The break-even point is how long it’ll take for the amount you save with lower payments to outweigh the expense of refinancing. If you plan to sell your home before your break-even point, it doesn’t make sense to refinance.

The turn times provided are estimates. While we’ll do our best to meet expectations, in times of high volume, they can’t be guaranteed. Your loan officer will be in touch to update you regularly so you’re never in the dark.

We offer Homebuyer Express with a 17 Day Closing Guarantee for buyers in a hurry. Guild Mortgage will pay qualifying customers $500 toward closing costs if delays solely by the company prevent the loan from closing on time in 17 days or more. For full terms and conditions, visit www.guildmortgage.com/cap-hbe-terms/.