As you narrow down your home choices, it's time to start applying for your mortgage. Here's how the application process typically works for Massachusetts home mortgages:
Pre-approval is an actual, written commitment by a lender to loan you a certain amount of money, provided you meet certain conditions. Pre-approval takes from several days to two-three-3 weeks.
Your lender will ask you for in-depth documentation of your current financial situation. This documentation typically includes, but isn't limited to:
This information gives your lender a good idea of how much mortgage debt you can reasonably take on.
Possibly the biggest benefit of pre-approval is the bargaining power it can give you, especially in a soft real estate market. As a pre-approved buyer, you can close the deal faster-which may be an incentive for a seller to drop their asking price.
First, gather the paperwork listed above. Then, choose one of these options:
As soon as an offer you've made on a home has been accepted, you'll begin the formal application process for your loan. Using the credit, income, and asset information you provided for pre-approval, your loan officer will determine the amount, rate, and terms of the mortgage.
Shortly after you apply, your lender will provide you with a good faith estimate that lists the costs you can expect to pay in order to close the purchase of your new home. These typically include:
Before your closing, you'll receive a preliminary HUD-1 Settlement Statement that should accurately list your final closing costs. Be prepared to see a difference of as much as 15% from your good faith estimate. Ask your lender to explain any of these differences. If these new costs put too much strain on your budget, ask about your options.
NEXT: The Closing