Mortgage Guide

Review our helpful mortgage checklist to understand the personal and financial documents you are required to provide when you apply for a mortgage.  Required documents include tax returns, W-2s, pay stubs, bank statements and other information. We also review the additional documents and information that self-employed borrowers are required to provide.  Understanding the documents you are required to submit enables you to get organized before you apply for your mortgage.

Our interactive mortgage timeline outlines the key steps in the mortgage process including getting organized, shopping lenders, selecting a loan program, getting approved and loan funding. Understand how long the mortgage process takes from application to closing and the factors that influence mortgage timing the most including market conditions, your loan application, lender and the type of property being financed.

Learn the credit score required to qualify for a mortgage and how your score impacts your ability to get approved as well as your mortgage terms including your interest rate.  Understand when you should check your credit score before you apply for a mortgage, how lenders treat different scores for co-borrowers and how you can get a mortgage with no score at all.  Understand how your score affects the mortgage programs you are eligible for.

Understand the components of total monthly housing expense including your mortgage payment, which is comprised of principal and interest, property tax, homeowners insurance and other potential housing-related costs such as HOA fees and mortgage insurance.  Understand all of the costs you are required to pay when you get a mortgage and own a home as your monthly expenses include more than just your mortgage payment.  Understand total monthly housing expense to make sure that you have the financial resources to own a home.

Review important mortgage qualification guidelines including borrower debt-to-income ratio, credit score, down payment, employment history, residence history and lender underwriting requirements. Learn how these requirements impact your ability to qualify for a mortgage.  Knowing the qualification guidelines before you apply for a mortgage improves your ability to get approved for your loan.

Understand the employment history requirements for a mortgage including for conventional, FHA, USDA, VA and HUD Section 184 loans.  Learn how the employment history requirements vary for self-employed borrowers, borrowers with seasonal or part-time work and borrowers with commission, bonus or overtime income.  Understand how to address gaps in your job history or if you recently changed jobs and your new position has a trial period.  

Learn how a debt-to-income ratio works and how lenders use the ratio to determine your maximum mortgage amount.  Understand the inputs that go into the income and debt components for the ratio and how you can improve your debt-to-income ratio before you apply for a mortgage.  Determine how your debt expenses such as credit cards and auto, student and personal loans affect what size mortgage you qualify for.

Learn what size mortgage you can afford based on lender guidelines and other factors including your personal financial profile.  Understand how your mortgage rate, loan program and loan length affect the mortgage you can afford and review multiple mortgage affordability examples.  Determine the mortgage amount that is right for you based on your financial priorities.

Understand what size down payment you need to buy a home and how your down payment impacts your mortgage rate, loan terms and the mortgage programs you are eligible for. Learn how you can buy a home with a down payment of less than 20% and how to use a gift or retirement funds for your down payment. 

Review a comprehensive summary of no and low down payment and first-time home buyer mortgage programs including conventional and government-backed programs.  This resources is especially helpful if you have limited financial resources and want to buy a home.  Saving for a down payment can be challenging so these program can make buying a home more attainable for qualified applicants.  Review program guidelines and explore your low down payment mortgage options. 

Learn what price home you can afford to buy based on your down payment and the loan you qualify for.  Understand the relationship between your down payment and mortgage amount and how these factors determine how much home you can afford.  Review how your mortgage terms affect the home you can buy.

Review a detailed list of over 35 potential closing costs including lender, appraiser, title company and closing agent fees.  Understand the estimated cost for each item so you can evaluate how much your closing costs should be.  Learn the factors that influence closing costs including property value, loan amount, lender, third party service providers and location.  Review helpful tips for avoiding excessive closing costs.

Understand your mortgage lender options including banks, mortgage brokers, mortgage bankers, credit unions and private money lenders. Review examples of each type of lender as well as their positives and negatives.  Learn how different types of lenders potentially offer unique benefits to borrowers based on their business model.  Taking advantage of your lender options when you shop for a mortgage helps you find the best loan terms.

Learn how to get pre-approved for your mortgage and how the process works including the information you are required to provide.  Understand the advantages to getting pre-approved including greater certainty that your loan closes, potentially speeding up your mortgage process and identifying potential issues in your application before you apply.  Getting pre-approved is usually free and there is no obligation for borrowers.  Know the differences between getting pre-approved and pre-qualified.

Review a comprehensive breakdown of a mortgage application so that you understand the detailed personal, financial and employment information you are required to submit.  The loan application addresses your income, assets, debts, job history and financial background.  Learn how lenders evaluate your loan application to determine if you are approved.

Learn how to use a Loan Estimate to compare mortgage terms and hold lenders accountable. Review the information contained in the Loan Estimate on a line-by-line basis and how your can use this document to help you select a lender.  Understand when lenders are required to provide you the Loan Estimate and if they can charge you to provide it.  

Review how to compare mortgage proposals to find the loan with the lowest mortgage rate and fees.  Understand how many lenders to contact, the documents to request and the loan terms to compare.  Comparing multiple loan proposals enables you to save money and find the lender and mortgage that are right for you.

Determine what mortgage program is right for you by learning how the three main types of loans work - fixed rate, adjustable rate (ARM), interest only mortgage. Review how different mortgage programs have different loan terms and mortgage payments.  Understand the positives and negatives for each program to select the one that meets your financial goals and risk profile.

Understand how the length of your mortgage impacts what size loan you can afford, your interest rate, monthly payment and total interest expense. Learn how mortgages with longer terms have lower monthly payments but higher total interest expense.  Review helpful examples that show you the financial impact of different mortgage lengths so you can determine how long your loan should be.

Determine if you should pay discount points to lower your mortgage rate including an explanation of how points impact your monthly payment and total interest expense. Learn how much lower your mortgage rate should be lower if you pay points and how the length of time you own your home impacts your decision.  Understand if paying discount points makes financial sense for you.

Learn if you should lock your mortgage and how locking your loan affects your interest rate and fees.  Understand how the length of the rate lock period can impact your mortgage terms and why it is important to focus on the length of the lock period when you compare proposals.  Review a helpful explanation of the reasons to lock your mortgage and when you should float your rate, depending on the interest rate environment.

Review a comprehensive explanation of a settlement agent's role in the mortgage process. The settlement agent, which is usually an escrow company or attorney, administers the mortgage closing process and manages the transfer of funds and property between parties. Understand estimated settlement agent costs and review a helpful diagram that outlines the services the settlement agent provides.

Learn the information included in a title report when you get a mortgage, what title insurance covers and the estimated cost. The title report outlines the property ownership, liens, easements and exceptions to title.  Understand who orders the title report, the purpose it serves, who pays for title insurance and how long the insurance is good for.

Understand how an appraisal report is used when you apply for a mortgage to buy a home and who hires the appraiser. Review and example appraisal report and learn the factors that determine the appraised property value including comparable sales and property amenities.  Know what to do if the appraisal comes up short and provides an estimated fair market property value that is less than expected.  Determine the estimated cost of an appraisal report and understand if it can be transferred.

Review a page-by-page explanation of the items contained in the Closing Disclosure and when lenders are required to provide the document to borrowers. Learn how to use the Closing Disclosure to determine if key mortgage terms are permitted to change and by how much.

Learn how to compare the Closing Disclosure to the Loan Estimate to make sure that your loan terms including mortgage rate and closing costs are fair and accurate. Your loan terms are only permitted to change a certain amount from when you apply for the mortgage until closing.  Comparing the Closing Disclosure, which is provided at the end of the mortgage process, to the Loan Estimate, what is provided at the beginning of the mortgage process, may enable you to find excessive costs or mistakes in your final mortgage terms.  Learn what to do if you identify significant discrepancies in your loan.

Review the key steps in the mortgage closing process including the preparation of loan documents, transaction recording and loan funding. Learn how loan proceeds are distributed to all parties involved in the mortgage process and how the property is transferred from seller to buyer.  Understand the third parties that manage mortgage closing.