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a young couple looks on at their new home from the yard after getting their first mortgage

How to Get a Mortgage

For most, the hardest part of the home buying process isn’t finding the perfect home. It’s the process of securing a mortgage. Whether you know a little about the mortgage process or have no idea how to get one, we’re here to help! 

Our guide to getting a mortgage breaks down every step of the process so you’ll know exactly what to expect through closing day.

Start by being prepared.

Everything goes smoothly if you’re prepared!

You can get a head start on the mortgage process by paying down your debt, especially loans high in value such as car loans. This can make a big difference in the application process!

Our team at NextMark will view a variety of your personal financial history in the application process. Your approval amount will be based on your debt-to-income ratio, which is how much debt you have compared to your income. 

The United States Consumer Financial Protection Bureau recommends keeping your ratio below 43%  – but the lower, the better. Paying off a credit card or eliminating another term loan will improve your ratio. That could increase how much you can borrow as well as improve your chances of getting approved.

Do a Credit Checkup

Your credit score is another part of the approval process. Scores, which range from 300 to 850, are based on how you use credit and how you pay your bills. There are three major credit bureaus: Equifax, Experian, and TransUnion. Each uses slightly different criteria, so your numbers with each won’t be the same. 

You should take advantage of your free annual credit reports. Be sure to check for errors and contact the reporting bureau immediately if you spot any. Some other best practices are to make all of your payments on time and reduce your credit card balances. Also, if you have any accounts that have past due amounts, bring them current.

Get Pre-Approved

A pre-approval is a written commitment confirming you qualify for a certain loan amount based on your personal financial history — like your credit and income. 

Getting pre-approved can help you stand out from other buyers! If multiple offers are on the table, sellers will often choose a pre-approved buyer. This indicates you’re more likely to be approved for financing and ultimately follow through with the deal. 

Since pre-approvals require proof of your credit and income, they’re typically the best indicator of whether you’ll qualify for a home loan and the amount. This is a helpful way to create and stick to a budget. Check out our mortgage calculators as an additional tool to find out how much home you can afford.

Choosing Your First Mortgage

There are many types of mortgage loans available so take the time to dig into your options. Remember to find what works best for your financial situation. Get in the know by taking a look at some of our most popular options.

 

Conventional Loans

Conventional loans are a match if you have a strong credit history, stable employment history, minimal debt, and enough funds to put down at least 3%. They’re used to finance most properties including primary residences, vacation homes, or investment properties. 

Since they usually require strong credit history, conventional loans tend to be lower than other types of mortgages, even if interest rates are slightly higher. If you’re financially prepared, this may be a good option for you.

Government-Backed Loans

The U.S. government isn’t a mortgage lender, but it does play a role in helping more Americans become homeowners. These loans are protected by mortgage insurance making it easier to offer more flexibility for qualifying. 

Some examples of government-backed loans we offer at NextMark include the Federal Housing Administration (FHA loans) and the U.S. Department of Veterans Affairs (VA loans). These loans typically have lower down payments and more flexibility in the qualification process.

Jumbo Loans

Jumbo loans are for those who wish to purchase a higher-priced property. Jumbo loans are called non-conforming because they go above a price limit set by the Federal Housing Financing Agency (FHFA). With NextMark jumbo loans, you can get a home in a higher-price range without paying enormous interest.

Get Paperwork Ready

One of the most important steps in getting a mortgage is being able to document your current finances. Most mortgage lenders will want to see your most recent pay stubs, two years of taxes, and at least 90 days of bank account statements for anyone on the mortgage. 

In many cases, lenders will also want to see documentation of any investments and retirement accounts. Put this package together before you start applying, and update it as you go. You should also remember that your lender may ask for bank statements and pay stubs after approval has been granted but before the loan has closed.

What to Expect Through Closing Day

Once you’ve been officially approved for a mortgage, you’re nearing the finish line. All that’s needed at that point is to complete the closing. 

The closing process usually takes place four to eight weeks after the offer on the home is accepted. This allows time for home inspections, home appraisals, funding, and title searches to be completed. Be sure to ask about any additional fees that may add up at this final stage in the process. 

On the day of closing, the ownership of the property is officially transferred to you as the buyer. This day consists of transferring funds, providing mortgage and title fees, and updating the deed of the house to your name. You should receive your closing documents three business days before your scheduled closing date. 

How to Get a Mortgage With NextMark Credit Union

This guide can help get you well on your way to homeownership! Staying prepared with these tips and educating yourself beforehand makes the process a lot more understandable and easy to navigate.

Now that you know how to get a mortgage, read below for comparison tips when it comes to shopping for a lender and the best mortgage for you!

HOW TO COMPARE MORTGAGE LOANS & LENDERS

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