How to Apply
At Blake Mortgage, we make the
process of buying a new home
fast and simple.
The Purchase Loan
The purchase of a new home is an exciting event and can be daunting. At Blake Mortgage, we make it easier by walking you through the mortgage process step by step.
We also want you to feel secure in knowing that you have a mortgage firm with decades of experience at your service. To that end, we’ve decided to take a look at the loan origination and underwriting process in detail to know what to expect.
Do you have a question about our process of getting a new home purchase loan? Learn more below, or feel free to a href=”/contact-us/”>contact us. We look forward to hearing from you!
The Loan Process
Step 1: Find Out How Much You Can Borrow
The first step in obtaining a loan is to determine how much money you can borrow. In case of buying a home, you should determine how much home you can afford even before you begin looking. By answering a few simple questions, we will calculate your buying power, based on standard lender guidelines.
Click here to Pre-Qualify.
You may also elect to get pre-approved for a loan which requires verification of your income, credit, assets and liabilities. It is recommended that you get pre-approved before you start looking for your new house so you:
- Look for properties within your range.
- Be in a strong position when negotiating with the seller (seller knows your loan is already approved).
- Close your loan quicker
More on Pre-Qualification
LTV or Loan-To-Value ratio is the maximum amount of exposure that a lender is willing to accept in financing your purchase. Lenders are usually prepared to lend a higher
percentage of the value, even up to 100%, to creditworthy borrowers. Another consideration in approving the maximum amount of loan for a particular borrower is the ratio of monthly debt payments (auto and personal loans) to income. Rule of thumb states that your monthly mortgage payments should not exceed 1/3 of your gross monthly income. Borrowers with high debt-to-income ratio need to pay a higher down payment in order to qualify for a lower LTV ratio.
FICO™ Credit Scores are widely used by almost all types of lenders in their credit decision. It is a quantified measure of creditworthiness of an individual, which is derived from mathematical models developed by Fair Isaac and Company in San Rafael, California. FICO™ scores reflect credit risk of the individual in comparison with that of general population. It is based on a number of factors including past payment history, total amount of borrowing, length of credit history, search for new credit, and type of credit established. When you begin shopping around for a new credit card or a loan, every time a lender runs your credit report it adversely effects your credit score. It is, advisable that you authorize the lender/broker to run your credit report only after you have chosen to apply for a loan through them.
Self-employed individuals find that there are greater hurdles to borrowing for them than an employed person. For many conventional lenders the problem with lending to the self-employed person is documenting an applicant’s income. Applicants with jobs can provide lenders with pay stubs, and lenders can verify the information through their employer. In the absence of such verifiable employment records, lenders rely on income tax returns, which they typically require for 2 years.
Lenders expect borrowers to come up with sufficient cash for the down payment and other fees payable by the borrower at the time of funding the loan. Down payment requirements are made with funds the borrowers have saved. If a borrower does not have the required down payment they may receive “gift funds” from an acceptable donor with a signed letter stating that the gifted funds do not have to be paid back.
Step 2: Select the Loan Program
Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each. Whether you are buying a home or refinancing, there are 2 basic types of home loans. Each has different reasons you’d choose them.
1) Fixed Rate Mortgage
Fixed rate mortgages usually have terms lasting 15 or 30 years. Throughout those years, the interest rate and monthly payments remain the same. You would select this type of loan when you:
• Plan to live in home more than 7 years
• Like the stability of a fixed principal/interest payment
• Don’t want to run the risk of future monthly payment increases
• Think your income and spending will stay the same
2) Adjustable Rate Mortgage
Adjustable Rate Mortgages typically last for 15 or 30 years, just like fixed rate mortgages. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease. You would select this type of loan when you:
• Plan to stay in your home less than 5 years
• Don’t mind having your monthly payment periodically change (up or down)
• Comfortable with the risk of possible payment increases in future
• Think your income will increase in the future
By carefully considering the above factors and seeking our professional advice, you should be able to select the one loan that matches your present condition as well as your future financial goals.
Step 3: Apply for A Loan
Step 4: Begin Loan Processing
Although lenders conform to standards set by government agencies, loan approval guidelines vary depending on the terms of each loan. Approval is based on two factors: your ability and willingness to repay the loan and the value of the property.
Once your loan application has been received, we will start the loan approval process immediately. Your loan processor will verify all the information you have given. If any discrepancies are found, either the processor or your loan officer will troubleshoot to straighten them out. This information includes:
Is your income sufficient to cover monthly payments? Industry guidelines are used to evaluate your income and your debts.
What is your ability to repay debts when due? Your credit report is reviewed to determine the type and terms of previous loans. Any lapses or delays in payment has to be explained.
Do you have the funds necessary to make the down payment and pay closing costs?
Is there sufficient value in the property? The property is appraised to determine market value. Location and zoning play a part in the evaluation.
Additional documentation might be required before making a final determination regarding your loan approval.
In order to improve your chances of getting a loan approval:
- Fill out your loan application completely. You may use our online forms to expedite the process.
- Respond promptly to any requests for additional documentation especially if your rate is locked or if your loan is to close by a certain date.
- Do not move money into or from your bank accounts without a paper trail. If you are receiving money from friends, family or other relatives, please prepare a gift letter and contact us.
- Do not make any major purchases until your loan is closed. Purchases cause your debts to increase and might have an adverse effect on your current application.
- Do not go out of town around your loan’s closing date. If you plan to be out of town, you may want to sign a Power of Attorney.
Step 5: Close Your Loan
After your loan is approved, you are ready to sign the final loan documents. You must review the documents prior to signing and make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate. The signing normally takes place in front of a notary public.
There are also several fees associated with obtaining a mortgage and transferring property ownership which you will be expected to pay at closing. Bring a cashier’s check for the down payment and closing costs if required. Personal checks are normally not accepted. You also will need to show your homeowner’s and flood policies and proof of payment to the insurance company.
Your loan will normally close shortly after you have signed the loan documents. On owner occupied refinance loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can close.
In Case of Divorce
In divorce situations, it is imperative that you consult with us prior to making any final decisions regarding the purchase of a new home or refinancing your existing home to get one spouse off the current mortgage as well as the title.
Contrary to popular belief you cannot simply take off one spouse or the other from the mortgage by simply signing a piece of paper. Since each borrower encumbered the debt at the time of origination, they are still responsible for that debt in the eyes of the lender regardless of their marital situation. To achieve this, one spouse, if they want to keep the marital residence, must refinance into a new loan and the other spouse will quitclaim their ownership in the property Hence, you will have a new loan in the name of one individual.
This procedure in and of itself presents a conundrum especially in a one income household where one spouse was the income earner and the other spouse took care of the household. When divorcing, the same income will need to support two households. It may not be enough. You will inevitably run into debt to income issues in underwriting.
What if, you ask there is spousal maintenance or alimony to the other spouse? Can they not qualify based on the spousal maintenance payments? This is an excellent question and presents a problem if there is not enough spousal maintenance for the required duration of time. Fannie Mae, Freddie Mac as well as portfolio lenders have specific rules and guidelines regarding this issue. It’s best to consult and know all the facts prior to making a final decision.
Why Choose Us for Home Purchase Loans?
The primary purpose of securing a mortgage loan is to ensure that you can close on that new purchase.
Why Clients Choose Blake Mortgage?
Experience, Honesty, Transparency, Professionalism, Diligence