Alan Zheng Real Estate
Alan Zheng Realtor

Acquiring a mortgage can be a daunting and perplexing task. Thus, I have created four simple steps to understand the mortgage process.

Step 1: Applying for a Mortgage

It is crucial to assess oneself financially before filling out an application. You need to work out the amount of money you have and the amount you need to borrow. It is vital to figure out how much you can afford before you apply for a mortgage, so you can financially support yourself later on. Then a mortgage associate will take your application either online, in person, or by phone. Once you have obtained information, the process of the mortgage application will start by confirming the information that you have given.

Step 2: Selecting a Mortgage Program that is Suitable 

Mortgages appear in all sizes and shapes. You have to select the type of loan that is in accordance with your goals and financial situation. Four types of underlying home financing loans are available to you.

A) Fixed Rate Mortgage

This type of mortgage typically has terms that last from 1 to 10 years. Additionally, the monthly payments and interest rate will stay the same for the term that is specified.

You should apply for this type of loan if you:

  • Are planning to live in the house for more than five years.

  • Prefer the fixed interest payment stability.

  • Think that your expenses and income will remain the same.

  • Don’t want the risk of a higher monthly payment.

B) Adjustable Rate Mortgage

This type of mortgage will last for 3-5 years. However, during these terms the monthly payments can rise or fall due to the interest rate on the loan going up or down. 

You should apply for this type of loan if you:

  • Are planning to live in the house for less than five years.

  • Are okay with the rise or fall in your monthly payments.

  • Are alright with the chances of payments increasing in the future. 

  • Are sure of the possibility of your income increasing in the future.

C) Combination Rate Mortgage

This type of mortgage combines adjustable and fixed interest rates.

You should apply for this type of loan if you:

  • Are looking to manage the risk of the interest rate.
  • Want to gain the benefit of both short and long term rates.
  • Prefer the stability that comes with a fixed interest payment.
  • Are not bothered by the rise or fall in the monthly payments.  

D) Lines of Credit

Lines of Credit is growing into an advanced way to finance your home purchase. You can acquire the amount that you want from the credit limit that you were given. You are required only to pay interest on what you will use. Plus, you can use this money for things like a child’s education, debt consolidation, and home renovations.  

Step 3: Approval and Submission of the Mortgage

Once the suitable mortgage program is chosen, you will give this information, and any other needed document, to your mortgage associate. Then you shall wait for the approval of the mortgage from the mortgage associate. You will be contacted either through fax or email. Once your mortgage is approved, the associate will go over your commitment to the mortgage. After the approval, any supplemental documents that are needed by the lender should be given to the associate within ten days.

Step 4: Lawyer

The associate will transfer the mortgage instructions to your lawyer so that they can review and sign the documents. At first, you shall go through all of the terms and conditions before signing to be sure of the loan terms and interest rates. Double-check and confirm the spelling of the address and names on the documents. A notary public or lawyer will be present during the signing. Some fees will be paid at the closing for the transfer of the property ownership and obtaining a mortgage. Do get a draft check for the closing costs and down payment, if needed. Personal checks will not be accepted. Insurance policy and other requirements, such as fire or flood insurance and proof of payment, will be required to be shown to the homeowners.

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