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The Mortgage Application Process

Know what you'll need, and what to do.

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:

Step 1: Pre-Approval

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:

  • Your W-2 forms from the last two years
  • Your pay stubs from the last two months
  • All recent bank and investment account statements (checking, savings, mutual funds, brokerage accounts, IRAs, 401(k)s, etc.)
  • An accounting of your current debts, including balances and minimum monthly payments (loans, credit cards, child support, etc.)
  • Your federal income tax returns if you're self-employed or own more than 25% of a business

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.

With Rockland Trust, pre-approval is easy!

First, gather the paperwork listed above. Then, choose one of these options:

Step 2: Application

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.

Step 3: Good faith estimate and HUD-1 statement

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:

  • Appraisal fees
  • Closing/attorney fees
  • Recording fees
  • Survey fees
  • Investor fees
  • Credit reports
  • Title or tax services
  • Homeowner's insurance
  • Private mortgage insurance
  • Title insurance
  • Escrow fees (fees associated with setting up an account to pay tax and insurance monthly with a mortgage. Escrow accounts are required for any purchase with less than 20% down payment.)
  • Loan origination charges
  • Points (charges for "buying down" your interest rate)

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