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What happens during the home loan process?

First-time homebuyers often approach the mortgage application with trepidation, but the home loan process doesn't have to be intimidating. You have several loan options, and getting approved for a home loan is usually a simple procedure.

Pre-qualification and pre-approval

Before anything else, you need to have an idea of whether you could get a house mortgage to begin with, and roughly how much you might have to work with. You do this in two steps called pre-qualification and pre-approval. Pre-qualification gives you a general idea of whether you're in an acceptable financial shape to proceed with looking for a home. It's a very basic look at your income and expenses.

Pre-approval is more formal. You have your credit pulled and evaluated; this step is also when lenders will begin to narrow down the loan programs you might qualify for. Your credit score, income, assets, current debt loads, and history of major events like bankruptcy all give lenders an idea of which loans may be more suitable for your situation. You'll find out the maximum amount of mortgage that you would likely receive, although that amount is not guaranteed.

Once you know what you might qualify for, you must decide what you want to qualify for. It's common for the upper limit of your potential mortgage to be much higher than you're personally comfortable paying.

Finding, applying, and appraising

Once you have your upper limit, look at properties. When you find one you like, have it inspected, present your offer, and apply for the mortgage. You and your lender will choose the loan program that is best for you, such as basic, conforming, jumbo, or government-insured. You'll also choose terms such as 15 or 30 years to repay, as well as fixed or adjustable interest rates.

You'll also have the house appraised to see if its value matches the offer you want to make. You may need to renegotiate the price if the appraisal shows the house is worth less than what you were going to pay. Your mortgage lender generally won't lend more than the value from the appraisal. When the price is set, you enter the closing stage.

Key City Lending knows that the process of buying houses can confuse buyers, and strives to provide easy-to-understand guidance. Our online application streamlines the process. Contact Key City Lending to find out more about your home loan options.

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