Number three in a four-part series.
By Justin Walseth, Vice President – Mortgage Department Manager
First International Bank & Trust, Member FDIC
You’ve found a nice three-bedroom in your dream neighborhood. Your pre-qualification letter helped prove to the sellers that you are serious about buying, and they accepted your purchase agreement. Yippee! Next step to buying your first home– the mortgage approval process.
I like to joke that in the past you only needed a pulse to get a mortgage and now you need a blood sample. This is an exaggeration, of course, but the truth is that patience and communication are keys to the home buying process. It is my job to get you to closing, so lean on me for help and reassurance when you need it.
Here’s what you can expect in this part of the home buying process:
First, the paperwork: your lender will provide you with a formal application or contract to complete. You will need to submit your personal financial documents (or update them, depending on the amount of time that has elapsed since pre-qualification), determine which, if any, loan programs you may take advantage of, and sign a variety of disclosures.
The mortgage interest rate will be one of the most important variables in this process, and you need to determine during application whether you will lock in the current rate or hold off a while in hopes of a better deal. Interest rates are very volatile, and there is no guarantee waiting will be in your favor, but you can wait until up to seven days prior to closing to lock-in the interest rate.
Four steps to approval
Now, the heavy lifting shifts to the mortgage expert and other service providers. There are four boxes that need to be checked in order for your application to be approved.
- Title work. This is basically making sure that the person selling the house actually has the legal authority to do so, without any liens or conditions on their ownership.
- Appraisal. Is the house worth what the seller wants for it? If it isn’t, the bank may decrease the amount of money it is willing to loan. At that point, you will need to renegotiate or back out of the offer.
- Homeowners insurance. Bottom line: you need it, and we have agents that can help.
- Credit approval. The fancy word for this is underwriting. Because the decision-making at First International Bank & Trust is local, I know where your application is every step of the way.
Problems, though rare, may arise in any step of the process, so like I said before – be patient. Expect to supply paperwork a few times and answer some odd questions. It is normal for your lender to come back to you three or four times for clarification or additional information. And don’t forget about our online mortgage resources for additional assistance.
With any luck, your patience will pay off and your mortgage will be approved! Now all that stands between you and your first home is closing. We’ll pick up there next time.
Justin Walseth is a mortgage expert in Fargo with more than 10 years of mortgage lending experience. He graduated from MSUM with a degree in Finance and Economics. When he’s away from work he enjoys golf, basketball and tennis as well as spending time with his wife and two children.