Our Home Loan Application Process
Getting a home loan shouldn't be hard. That's our founding principle, and it's why our friendly loan officers are committed to making the mortgage application process simple and transparent. In fact, it's so simple that we like to think of our streamlined process as a beach vacation for your mortgage anxieties.
Discover How Easy Mortgage Approval Can Be
Application to Approval: Our Process
At Eagle Home Financial, we understand that navigating the mortgage application process can feel overwhelming. Our goal is to make it as seamless as possible, ensuring you have a clear path to homeownership. Here's a quick overview of our six-step application process.
Step 1: Get Pre-Qualified
Before you begin shopping, we recommend determining how much house you can afford. Prequalification gives you an estimate of your borrowing power, helps you budget, gives you more negotiating power, and makes your offer more attractive to sellers.
You may also elect to get pre-approved for a loan, which requires verification of your income, credit, assets, and liabilities. We recommend getting pre-approved before you start looking for your new house so you can:
- Look for properties within your range
- Be in a better position when negotiating with the seller (as the seller knows your loan is already approved)
- Submit your offer right away
- Secure your dream home when it pops up on the market
More on Pre-Qualification
Loan-to-Value (LTV) and Debt-to-Income Ratios
LTV, or Loan-To-Value, is the amount of money that you borrow from the lender relative to the value of the property that you are purchasing. For example, if the home costs $200,000 and you borrow $160,000 from the lender, your LTV is 80%. That means you are using a down payment of 20% or $40,000.
Depending on the loan product that you qualify for, you could use a down payment as low as 3% conventional, 3.5% FHA, or even 0% for a VA Loan.However, another important factor is your debt-to-income ratio—your monthly debt compared to your income. A general guideline is that your monthly mortgage payment should be no more than one-third of your monthly income. If you have large debts, you might need a larger down payment to get a lower LTV and qualify for the loan.
FICO™ Credit Score
Lenders use FICO® credit scores to measure your creditworthiness. Multiple factors contribute to these scores, including past payment history, the total amount of debt, the length of your credit history, recent applications for new credit, and the types of credit accounts held. It's worth noting that each time you inquire about a new credit card or loan, the act of a lender checking your credit report can negatively impact your credit score.
However, at Eagle Home Financial, we can conduct a "soft pull" for your mortgage pre-approval. A soft pull will not impact your credit score, and it provides us with the information we need to complete your pre-approval. Additionally, it safeguards you from predatory lenders becoming aware that you are seeking pre-approval and bombarding you with calls day and night. Rest assured, we never share your contact information with anyone, although credit bureaus may already have and sell it. We take extensive measures to protect our clients' privacy.
Self-employed borrowers often encounter greater lending obstacles than those who are employed. For many conventional lenders, the challenge in lending to self-employed individuals lies in documenting their income. Applicants with traditional jobs can provide lenders with pay stubs, and lenders can easily verify this information through their employers. In the absence of verifiable employment records, lenders typically rely on income tax returns, which they generally require for a period of two years.
Source of Down Payment
Lenders expect borrowers to provide sufficient cash for the down payment and other fees due at the time of funding the loan. Typically, down payment requirements are made using funds that borrowers have saved. If a borrower lacks the required down payment, they may receive “gift funds” from an acceptable donor, along with a signed letter confirming that the gifted funds do not require repayment.
Step 2: Select the Right Loan Program
Home loans come in many shapes and sizes, and at Eagle Home Financial, we offer loan terms ranging from 8 to 30 years. This flexibility allows us to customize your loan to precisely match your needs and budget. When deciding which loan makes the most sense for your financial situation and goals, it's important to understand the benefits of each option. Whether you are buying a home or refinancing, there are two basic types of home loans, each with distinct advantages.
Fixed-rate mortgages usually have terms lasting 15 or 30 years. Throughout those years, the interest rate and monthly payments remain the same. This loan is ideal for those who:
- Plan to live in their home for more than seven years
- Prefer the stability of fixed principal and interest payments
- Want to avoid the risk of future monthly payment increases
- Believe their income and spending will remain stable
Adjustable Rate Mortgage
Adjustable Rate Mortgages (often called ARMs) typically last for 15 or 30 years, just like fixed-rate mortgages. However, during those years, the interest rate on the loan may go up or down based on market conditions, resulting in monthly payment increases or decreases. You might choose this type of loan if you:
- Plan to stay in your home for less than five years
- Don't mind having your monthly payment periodically change (up or down)
- Are comfortable with the risk of possible payment increases in the future
- Believe your income will increase in the future
Step 3: Apply For a Loan
Now it’s time to formally submit your home loan application. This stage is where we validate your income, employment, credit history, and other financial details to ensure accuracy and eligibility.
Step 4: Begin Loan Processing & Underwriting
Although lenders conform to standards set by government agencies, loan approval guidelines can vary depending on the terms of each loan. Generally, approval is based on two factors: your ability and willingness to repay the loan and the property's value.
Once we receive your accepted offer, we will begin the underwriting process immediately. Your loan processor will verify all the information you have provided. If any discrepancies are found, either the processor or your loan officer will work to resolve them. This information includes:
- Income/Employment Check: Is your income sufficient to cover monthly payments? Industry guidelines are used to evaluate your income and your debts.
- Credit Check: 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 are considered and must be explained.
- Asset Evaluation: Do you have the funds to make the down payment and cover closing costs?
- Property Appraisal: Is there sufficient value in the property? The property is appraised to determine its market value. Location and zoning play a part in the evaluation.
- Additional Documentation: In some cases, additional documentation might be required before finalizing your loan approval.
- Homeowner's Insurance: You will be responsible for selecting a homeowner's insurance policy from any provider you choose. Your premium will be paid for at closing as a part of your closing costs unless you elect to pay for it prior to the closing.
To improve your chances of getting loan approval:
- Fill out your mortgage application completely. You may use our online forms to expedite the process.
- Respond promptly to requests for additional documentation, especially if your interest rate is locked or your loan is scheduled to close by a specific date.
- Do not move money into or from your bank accounts without a paper trail. If you receive money from friends, family, or relatives, please prepare a gift letter and contact us.
- Avoid making any major purchases until your loan is closed. Purchases can increase your debts and might adversely affect your current application.
- If you plan to be out of town around your loan's closing date, consider signing a Power of Attorney.
Step 5: Fund Your Loan
Once your loan is approved, you will sign the final loan documents. You will either bring a cashier's check or wire your funds prior to closing for the down payment and closing costs.You must review the documents before signing and ensure 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 usually 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. If required, bring a cashier's check for the down payment and closing costs. Personal checks are normally not accepted.
Your loan will normally close shortly after you sign the loan documents. On owner-occupied refinance loan transactions, federal law requires that you have three days to review the documents before your loan transaction can close.
Why Work With Us?
Complete your mortgage process in as little as three weeks for a faster home-buying experience.
Expertise at Every Step
Receive personalized advice from experienced mortgage experts who understand your needs and treat you like family.
Gain access to the most competitive rates in the market while lowering your long-term mortgage expenses.
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