Basic Mortgage Application Stages

couple talking with loan officer

At Altius Mortgage and our partners at Mortgage Ogden, one of the primary services our mortgage brokers provide is a thorough and complete walk-through of the mortgage process. A home loan is no small undertaking, and we want our clients to have a crystal clear idea of what they’re going to be facing as they get started.

One big element here involves the basic stages of the application process for a mortgage. These may vary slightly within a given situation, but in most cases there are three steps here: Pre-qualification, pre-approval and the final, binding loan commitment. Here are the basics on each of these three important application stages.

Pre-Qualification

Pre-qualification is a first step that often gets confused with pre-approval, which is actually different and comes later. Pre-qualification is less formal than pre-approval – more of a financial meet-and-greet, if you will.

To get started, you’ll provide a lender with very basic financial information like debts, income and basic assets. You won’t be assessed a credit report or any background checks – these will come later. During this stage, your lender is simply looking to get a very general picture of your finances. This is also a good time to ask any initial questions you have, plus go over your expectations and goals for the mortgage process.

Pre-Approval

Pre-approval follows a similar procedural format to pre-qualification, which is why they’re often confused. Pre-approval is the more formal stage, however – it’s more detailed, including background and credit checks performed, and it’s also more binding. In a situation where everything goes as planned, you’ll finish pre-approval with a written commitment for an exact loan amount from your lender. With this commitment, you can begin searching for homes within your range.

Loan Commitment

When you’ve matched your price range and found a home, it’s time for the loan commitment step. Your lender will go through one final check to ensure no big changes have taken place to your finances during the home search, and then all that’s left will be for you to provide your signature and move the process forward.

Want to find out more about the application process, or interested in any of our other mortgage services? Speak to the brokers at Altius Mortgage today.

Avoiding Common Mortgage Mistakes

The mortgage application process can be complex or difficult for many people, and that’s why a trusted mortgage broker like Altius Mortgage is so important. We’ve seen every situation possible in this industry, and our team is here to guide you through every step.

This means pointing you in the right direction in many areas, but it also means steering you away from the wrong direction. With that in mind, let’s look at a few of the most common mistakes we see people make before or during the mortgage approval process. Once you’ve finished here, you should have a good idea of a few of the biggest pitfalls to avoid.

Down Payment

In the majority of loan situations, your lender will require a 20 percent down payment. If you aren’t able to get this, though, you’ll be required to pay what’s called mortgage insurance: A protection for the lender against the possibility of you defaulting on payments. You pay these monthly insurance premiums, and they can often be very pricy – more pricy than the original down payment over the life of the loan, in many cases. Coming up with the lump sum up front can be difficult, but it’s worth the effort to avoid additional expenses.

APR

You hear about APR on television commercials, but few people actually know what it means. APR refers to the final cost you’ll pay on a mortgage, including taxes and any lender fees. Some lenders will show you a pretty-looking number for your mortgage rates, but then hit you with a bunch of big fees in the paperwork fees. This is avoided if you’re demanding the APR cost.

Additional Costs

Besides these kinds of fees, there are other costs you have to plan for. Things like maintenance, potential emergencies and general bits of upkeep will cost money, and we recommend that you keep at least 1 or 2 percent of your yearly budget set aside for these realities.

Credit Score

Credit score goes a long way to determining several major factors, including your interest rate. You should be checking this score well in advance of shopping for a loan – there are many free services online to do so.

Want to learn more about any part of the home loan process, or interested in scheduling a consultation? Speak to one of our brokers at Altius Mortgage today.