Buying a home can feel overwhelming, but it doesn’t have to be. Many first-time buyers get confused by the mortgage process, from pre-approval to closing. This guide breaks down everything you need to know, in plain language, so you can feel confident about buying your dream home with HomeSimply
Prequalification vs. Pre-Approval
- Prequalification: A rough estimate of how much you can borrow based on your income and debts. It’s a helpful starting point.
- Pre-approval: A formal process where the lender verifies your financial info and provides a letter stating the amount you’re tentatively approved for. This strengthens your offer with sellers.
Learn more about pre-approval vs prequalification
Qualifying for a Mortgage
Lenders evaluate four main things:
- Credit Score: Higher scores usually mean lower interest rates. Conventional loans often require 620+, while FHA may accept lower.
- Debt-to-Income Ratio: Preferably below 36%, but some programs allow higher.
- Income & Employment: Stable income is key. Self-employed buyers may need extra documents.
- Assets: Savings for down payment and closing costs are required.
More on what mortgage lenders look for
Types of Mortgages:
- Fixed-rate: Same payments for the life of the loan.
- Adjustable-rate (ARM): Initial fixed period, then changes with the market.
- Conventional: Not backed by the government; stricter requirements.
- FHA: Low down payment options, flexible credit requirements.
- VA: For eligible veterans; often no down payment.
- USDA: For buyers in rural areas; often no down payment.
See different mortgage types
Mortgage Process & Timeline
Preparation: Check credit, budget, save for down payment.
Pre-Approval: Shows lenders and sellers you’re serious.
House Hunting: Work with an agent to find homes in your price range.
Loan Application: After your offer is accepted, submit financial documents.
Underwriting: Lender verifies info, orders appraisal, checks title.
Closing Disclosure: Review final terms at least 3 days before closing.
Closing: Sign documents, pay the remaining down payment, and get your keys.
Learn more about the mortgage process
Down Payment & Closing Costs
Down Payment: Often 20% to avoid PMI, but some loans allow less.
PMI: Protects the lender if your down payment is under 20%.
Closing Costs: Typically 2–5% of the loan amount. Paid mostly at closing, though some upfront fees apply.
CONCLUSION
Buying a home doesn’t have to be confusing. From pre-approval to closing, understanding the mortgage process helps you make smarter decisions and reduces stress. HomeSimply is here to guide you through each step so you can confidently secure the right mortgage for your needs.
