Your Step-by-Step Guide to the Mortgage Approval Process

by | Mar 19, 2021 | Property | 0 comments

From the financial benefits of homeownership to the added privacy of owning a house, there are many great perks of buying a home. Yet it’s not a simple process, and it’s not unusual to feel overwhelmed as a first-time buyer. At Fearn Property Specialist, we understand the complex process of buying a home, so we’ve put together the following guide to give you an idea of what to expect in your home buying journey.

Set Your Homebuying Budget and Pre-Apply for a Loan

Once you’ve decided that you’re ready to become a homeowner, it’s important to check your credit and set a budget. CNN explains you should take into account your annual household income, recurring monthly bills, and savings to determine how much you can afford to spend on a home. In Biloxi, for example, the median sale price was $203,000 over the past month, so it’s important to keep this figure in mind when you start looking.

After setting your budget, meet with a lender to pre-apply for a mortgage. Having a pre-approval letter makes you a more appealing buyer when you decide to make an offer, and you’ll have the opportunity to lock in your rate, though only for a certain amount of time.

Even if you get a great rate, there are ways to improve it even more: for example, you have the option to “buy down your rate” by purchasing points from your lender for a lower rate. Whether this is the right choice depends on your financial situation, as well as how long you plan to live in your home. To see what you can expect to pay for your mortgage with a buydown rate, use a mortgage points calculator

Work with an Agent to Find Your Dream Home

After obtaining your pre-approval letter, you can begin to look for homes that fall within your price range. You should work with an experienced real estate agent through Fearn Property Specialist to simplify this process—especially if you’re a first-time homebuyer.

Once you select a real estate agent to assist you, they will gather your search criteria, send you available listings, and schedule showings. You can also browse on your own through online listings, but keep in mind that this data isn’t usually updated immediately. Your agent will be your best resource.

Make an Offer

Once you find a home and you’re ready to make an offer, your realtor will guide you through this process. Typically, the offer to the seller(s) will include your earnest money, the amount of your down payment, and your pre-approval letter. Additionally, the offer must state whether you or the seller(s) will be responsible for paying your closing costs.

If your offer is accepted, the home will then undergo an appraisal—as this process is used to calculate the exact value of the property. If you decide to move forward with the purchase of the home after the appraisal results come in, your agent will then encourage you to pay for a home inspection.

After the inspection, you may use the results to ask the sellers to make home repairs, pay for some of your closing costs, and/or lower the purchase of the home. At this time, you can also choose to walk away from the home if you’re no longer interested.

Seal the Deal

As the last few steps in the homebuying process, you’ll walk through the home to ensure that everything looks as it should. After the final walk-through, you’ll complete the closing process and receive the keys to your new home.

Buying a home is a challenging, multi-step process that takes time and dedication on your part. However, the benefits of owning a home are well worth the commitment—and you’ll begin to experience these perks soon after you move in. Prepare properly and ensure you have the right help with finding a loan and home, and you’ll be settling in before you know it!

Photo by Kelly Lacy from Pexels


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