How To Write Mortgage Into Your 2022 New Year's Resolutions
12.27.2021 | Category: Homebuying
You did it. You got through the holiday season without going over budget or dipping into your savings. You turned down that tempting retail card with the deep sign-on discount and even paid off a good portion of your credit debt with your year-end bonus. There might still be a few financial goals to hit but you’re in good shape.
If you’re looking to add getting approved for a mortgage loan to your New Year’s resolutions, then you’ve come to the right place.
When creating any resolution, it’s important to set timely, reasonable goals. A great way to do that is to consider all the steps that you need to take before reaching your desired goal.
When buying a new home, this can be broken down into three attainable goals, with smaller steps included to help you reach your goal:
- Planning Your Personal Finances (1-3 years)
- Starting Your Home Search (2-6 months)
- Closing Your Home Mortgage Loan (30-60 days)
Planning Your Personal Finances (1-3 years)
Preparing your finances is your first step toward homeownership and often the step that takes the longest. Hopefully you already have a long history of using credit wisely, saving well and staying within your budget.
If you’re looking to buy a home next year, you'll want to assess your budget to determine how much house you can afford and how much you can pay for a monthly mortgage payment. You’ll also want to start researching the different loan types you might qualify for and how interest rates might influence your monthly payment.
Be sure to carefully calculate your debt-to-income (DTI) ratio as it is today as well as your estimated DTI once you have a home loan to ensure you will be preapproved for the home loan amount you’re seeking. This is one of the most important factors when approving a home mortgage loan and you don’t want to be caught off-guard if your DTI is too high.
It’s important to take the time to pay down debts and truly research the home buying process before committing. It’s okay if the timing on this step fluctuates from one year to ten years but for many homebuyers, preparing their finances takes no more than a year - well within reasonable for making it a part of your New Year’s resolution.
Starting to Home Shop (2-6 months)
Once you feel your credit, budget and debt-to-income ratio are all in good shape, it’s time to work with a reputable lender like Mutual of Omaha Mortgage to get preapproved for your home mortgage loan.
The process for pre-approval is made easy with tools like free mortgage calculators to quickly estimate your monthly mortgage payment, compare loan options and give you the best idea of the kind of home loan that might best suit your goals.
After you have your pre-approval letter in hand, it’s time to work with a real estate agent to help you find your new home. It’s important to work with someone experienced in negotiating the type of loan you qualify for to be sure your best interests are being considered.
For example, if you’re a first-time homebuyer looking to utilize an FHA loan for your home purchase, be sure your real estate agent is familiar with the process and can best advise you on how to make a strong offer in this competitive real estate environment. If you're an active-duty service member looking to relocate to a new area, it’s equally vital to ensure your agent is familiar with the details of a VA loan and how best to work with an agent out of their market.
As you home shop, try to stay within your budget and work with your real estate agent and home mortgage lender if your financial situation or homebuying preferences change. In this competitive real estate market with historically low inventory, it might take a little longer than some homebuyers expect to find the home of their dreams, but with a little patience you’re sure to find something that fits your needs.
If you think you might need to take some time off from the home shopping experience, be sure to remember to reassess your budget and expectations before reapplying for pre-approval once you're ready to jump back on the saddle. Most pre-approval letters expire after 90 days.
Closing Your Home Mortgage Loan (30-60 days)
You’re in the game and you just had your offer accepted on your dream home. You’re close to the finish line with homeownership in sight. Now it’s time to work with your real estate agent and loan officer to open escrow and close your home mortgage loan.
There are still quite a few more steps to achieving your new year resolution of homeownership but with the right home lender, any bumps in the road will be handled with care.
The first step is to open escrow and transfer your earnest money to show that you are serious about your offer.
Then, your lender will send you mortgage documents to be processed including a credit check, bank statements, pay stubs and other financial documents to verify the information you’re including on your loan documents.
Next, the title to your home will need to be cleared to ensure there are no other liens on the property.
After the title clears, the next big step is the home inspection, which happens about a week after the offer is accepted and is handled by the homebuyer to ensure there are no issues with the home that might put the loan in jeopardy.
One the inspection takes place, an appraisal is ordered and sent to the lender to confirm the value of the home and the final home loan amount.
Right before closing, a walkthrough is conducted to confirm the property’s condition hasn’t changed since their last visit, that requested repairs have been made and that the contract terms will be met.
Lastly, closing takes place. Just prior, you will receive your closing statement, which includes a comprehensive breakdown of expenses and costs from the purchase of your home. You will want to be sure to work closely with your real estate agent to carefully review these documents and have any questions you might have answered. Any errors or inconsistencies should be addressed before you sign your closing documents.
All in all, this part of the process usually takes between 30 and 60 days, depending on if the seller has contingencies. The most common contingency is when the sale of the home is contingent on the seller’s ability to purchase their new home. Be sure to work with your real estate agent to realistically estimate your closing date.
Understanding the steps to reach your homeownership goals is an important part of buying your home. As a prospective buyer, the new year is a great time to start seriously considering the purchase of a new home and with a practical timeframe and realistic goal setting, you will be sure to be in your new home by the next new year!