How to Get a Mortgage

Four Parts:Reviewing your FinancesShopping for a LenderAssessing Your OptionsApplying for a Mortgage

A mortgage is likely the largest debt you’ll ever take on, so it’s important to choose the correct lender when applying for one. There are a number of things lenders take into account when deciding whether or not to finance your purchase of a home, some of them involve your assets, income, credit and debt while others involve the value and condition of the property you hope to purchase. You too should consider a number of things when choosing a lender to work with: things like additional fees, commission rates and how comfortable you are dealing with them. Purchasing a home can be a significant undertaking, but through preparation you can ensure that you won’t regret your decision or your investment.

Part 1
Reviewing your Finances

  1. Image titled Apply for a Marriage Certificate in Dwarka Step 10
    Obtain a copy of your credit report. It’s important to be fully aware of your credit score and what elements of it are important to lenders. There are a number of free ways you can access your credit score, or you can choose to pay a credit monitoring service to provide you with a copy. Most lenders will not approve a mortgage application for someone with a credit score below 580.[1]
    • There are a number of web pages where you can get a free copy of your credit report.
    • Use your credit report to identify negative information that you may need to explain to a lender like late or missed payments or defaulted loans.
  2. Image titled Get Business Loans Step 7
    Dispute any incorrect information on your credit report. As you review your credit report, look for items that are not accurate or should not be on your credit report at all. You can contact the credit bureaus to challenge inaccurate information and ultimately have it removed from your credit report. Removing inaccurate negative information will increase your credit score and improve your chances of being approved for a mortgage.[2]
  3. Image titled Create a Budget Step 7
    Evaluate your income and expenses to establish a budget. In order to apply for a mortgage, you should first determine what kind of a monthly payment you can afford. Take an inventory of all your monthly expenses and compare it to your monthly income. Use these figures to establish a budget that allows room for a monthly mortgage payment.[3]
    • Seeing how much you can afford per month will help you to determine a price range for a house you can afford.
    • You can use a mortgage calculator to determine how much you can pay for a house based on a monthly payment you can afford.
    • By determining what your outgoing expenses are, you can begin to establish a working budget.
  4. Image titled Do a Monthly Budget Step 6
    Determine how much you can save. The standard down payment required when purchasing a house is 20% of the sale price. That means you will need to save up $60,000 for a down payment on a $300,000 house. Some banks are willing to work with you on how much you’ll need to put down, but the closer you get to the 20% mark, the better your chances become of being approved. You will also need to set money aside for other expenses such as closing and moving costs. Closing costs are all the fees associated with completed the mortgage deal and include the cost of running your credit report, attorney’s fees, underwriting fees and a recording fee paid to your local town or state for making changes to land records among others.[4]
    • Closing costs are usually between 2% and 5% of the sale price of the house, meaning they could be $6,000 to $15,000 on a $300,000 house.
    • Moving costs will vary widely depending on how much you own and how far you need to move.
  5. Image titled Get Business Loans Step 2
    Gather all the necessary documentation. There are a number of documents you will need to gather when preparing to apply for a mortgage. Some documents serve as proof of employment, some are proof of your income, and others speak to your level of debt. Gathering these documents ahead of time will ensure your application process isn’t delayed as you try to find each of them. Gather the following documents as a part of your preparation process:[5]
    • At least one month’s worth of pay stubs
    • W-2s from the past two years
    • Documents pertaining to long term debts like car or student loans
    • Bank statements from the past few months
    • Proof of any other income

Part 2
Shopping for a Lender

  1. Image titled Invest In Real Estate With No Money Step 11
    Choose to use a mortgage broker. A mortgage broker serves as a middleman between you and lending institutions. Mortgage brokers work directly with both you and the lenders to help you to qualify for a mortgage loan and to find the right one for you. A mortgage broker can help make the process of applying for a mortgage easier.[6]
    • The mortgage broker will collect all of the same documents from you that a lender would request when applying for a mortgage.
    • Remember that mortgage brokers must be paid for their service, which may result in increased costs to you. Sometimes brokers are paid commission by the lending institution, other times they charge loan origination fees from the consumer.
  2. Image titled Invest In Real Estate With No Money Step 5
    Consider going to a direct lender. Instead of using a mortgage broker, you may want to go directly to a lender to apply for a mortgage. This method will require more effort on your part, as it will be up to you to shop for lenders and compare things like fees and interest rates. There are many lenders you can choose from when applying for a mortgage, and each may offer different specifics on the loan agreement. It’s important you review your options carefully when choosing a lending institution, as a mortgage is a long term investment.[7]
    • Different direct lenders may be better for you based on things like your credit score. Credit unions are sometimes more lenient about lower credit scores than commercial banks.
    • Make a short list of possible banks you might want to apply for a mortgage with then narrow down your list as you eliminate options.
  3. Image titled Get Business Loans Step 11
    Check lender reviews online. Another great way to eliminate some lender options from your list is to research them online. Look for reviews on independent websites that are posted by previous customers. You may also want to check with the Better Business Bureau online to see if there have been formal complaints levied against the lending institutions you are considering.[8]
    • Access the Better Business Bureau online at
    • You can find reviews of lenders at websites like and
  4. Image titled Get Business Loans Step 14
    Observe how the lender responds to your requests. When researching your lender options, it’s important that you feel as though the lender you work with is committed to working with you and ensuring you are comfortable with the process. Pay attention to how the people you interact with treat you and your questions to help you choose the right lender for you.[9]
    • Do you receive a prompt response when calling or e-mailing with questions?
    • Were they happy to answer your questions about the process and what they can offer you?
    • Make sure you are comfortable with the lender you deal with, otherwise that lender may not be right for you.
  5. Image titled Reduce Your Student Loan Payments Step 6
    Learn the different types of mortgages. There are a number of different types of mortgages you can receive when purchasing a home, with even more options for variation within each type. The two most common types of mortgages you will hear about are fixed rate and variable rate mortgages. Fixed rate mortgages are similar to loans you may have taken out in the past for things like a car: they include a set payment for a fixed amount of time. Upon the completion of those payments, the home is paid off. Variable rate mortgages, on the other hand, often have lower initial payments but the monthly payments are reassessed after a certain amount of time, and often raised.[10]
    • Variable rate mortgages are often easier to be approved for because of the lower initial monthly costs, but can cause problems when interest rate adjustments increase your monthly payment.
    • Fixed rate mortgages often cost more per month at first, but are simpler to understand and will not increase with interest rates.
    • There are some types of loans that combine these two elements, such as Treasury ARMs, which have a fixed rate for a set amount of time, followed by a variable rate that is adjusted each year.

Part 3
Assessing Your Options

  1. Image titled Reduce Your Student Loan Payments Step 3
    Ask about additional fees or prepayment penalties. There are a number of possible fees associated with mortgage lending, so it’s important that you discuss them with lenders before applying for your mortgage. Ensure you have a thorough understanding of the fees and additional expenses you will be expected to cover as a part of the mortgage process with each lender.[11]
    • Ask for a written estimate of your costs that includes a breakdown of all associates expenses and fees.
    • Ask questions about any fees that you don’t understand or are unsure about. It is your money, so don’t be shy about asking.
  2. Image titled Reduce Your Student Loan Payments Step 1
    Learn the difference between real and negotiable costs. The different costs associated with purchasing a home are divided into two categories: real and negotiable costs. Real costs are non-negotiable and cannot be adjusted, while you may be able to negotiate regarding the remaining costs. Understanding the differences between the two can help you approach the discussion well equipped to limit any additional expenses you may incur in the home buying process.[12]
    • Examples of real costs are: expenses associated with pulling your credit reports, inspecting the house and the appraisal of the property.
    • Negotiable costs include commission the lender charges you for their work. Lenders usually receive a commission of 1-2% but can receive up to 4% of the cost of the house as their commission. These costs can often be negotiated.
  3. Image titled Prepare a Budget Step 10
    Look for the best interest rate. The best way to get a good mortgage rate is to position yourself for one by having a good credit history, but you will still want to do some homework to find the best interest rate you can. Your mortgage interest rate determines how much interest you will pay the bank on the loan you take out to purchase a house, so a lower interest rate will reduce your monthly payments as well as how much you end up paying overall. Compare the interest rates offered by multiple banks and consider any special programs you may be qualified for.[13]
    • You can track current mortgage rates online from different banks in your area on websites like To look at current rates, go here:
    • Try to get your paperwork to the bank quickly when finding a rate that you want, in order to ensure it doesn’t change before you lock it in.
    • Check with your bank or credit union about any incentives or special programs they offer existing customers for mortgage rates.
  4. Image titled Do a Monthly Budget Step 11
    Learn the difference between “pre-qualified” and “pre-approved.” When applying for a mortgage, some lenders may offer to pre-qualify or pre-approve you for a mortgage. It’s important that you understand the distinction between the two and what they mean for your chances at purchasing a home. Prequalification can help you understand how much you can afford and serve as an aid when choosing which houses to look for, but ultimately provides sellers with little certainty. Being pre-approved can demonstrate that you are serious about purchasing a home and add weight to your offer.[14]
    • Being pre-qualified means a lender discussed your financial situation, credit and income and determined that you are qualified for a mortgage level indicated in the letter.
    • Being pre-approved means the lender actually ran your credit and confirmed your financial information. A pre-approval is much more official because it has been backed up with evidence.
    • Being pre-qualified is no guarantee that you will be approved for a mortgage. Being pre-approved is also not technically a guarantee, but can be seen as indicating the high likelihood that you will be approved.
  5. Image titled Announce Your Retirement Step 1
    Compare your options. After researching your lending options and making sure all of your questions are answered, compare the lenders you haven’t eliminated to try to choose the lender that seems right for you. You should feel comfortable working with the lender you choose and you should be confident that they can help you navigate the mortgage process.[15]
    • Remember that mortgages can last for decades, so it’s important to choose a lender you can work with.
    • The lender you choose should be willing to provide you with advice on how to improve your credit and get approved through the application process.

Part 4
Applying for a Mortgage

  1. Image titled Reduce Your Student Loan Payments Step 5
    Fill out the application. Once you’ve chosen a lender, you will need to fill out their mortgage application. The lender may provide you with some assistance in completing the forms. You will need to provide information regarding your identity, finances and debt as a part of the application. The application may be fairly lengthy, and will also include information about the house you are attempting to buy and the terms of the loan.[16]
    • Use the documentation you gathered when assessing your finances to assist in completing the application.
  2. Image titled Reduce Your Student Loan Payments Step 4
    Provide the lender with documents to support your application. You will need to support the information you write in the application with documentation that substantiates your claims. This documentation will likely be the same as the documents you collected when assessing your finances, but lenders may ask for other documents as well.[17]
    • You will need to provide evidence of your income and your assets.
    • You will likely need to provide information regarding your taxes.
    • You will need to provide documents pertaining to outstanding debts and be able to speak about them if asked.
  3. Image titled Invest In Real Estate With No Money Step 6
    Have a home inspection completed on the house you hope to buy. Most lenders require an inspection to be conducted by a qualified home inspector before approving a mortgage application. Home inspectors look for signs of structural damage to the home and identify things that may need to be repaired prior to financing your purchase of the home. [18]
    • If damage is identified, it will likely need to be repaired prior to a lender approving your application.
    • You can use the information provided by the inspection to renegotiate the price of the house if you will be required to pay for repairs.
  4. Image titled Apply for a Marriage Certificate in Dwarka Step 14
    Have the house you hope to buy appraised. The lender will likely arrange to have the home you intend to purchase independently appraised to determine its value. The lender will then compare the appraised value of the home with the selling price and determine if they are willing to finance the purchase at that price point.[19]
    • The appraisal is intended to ensure you are paying a fair price for the home you wish to purchase.
    • The bank also wants to ensure the price is fair in the event you default on the mortgage.
  5. Image titled Invest In Real Estate With No Money Step 7
    Receive a loan estimate. After submitting your application, you will receive a loan estimate within three business days. The loan estimate will provide you with the estimated costs associated with your mortgage, including closing costs and any other fees. It will also show you what your expected monthly costs will be as you repay the mortgage loan. This gives you an opportunity to review the overall cost of your home purchase.[20]
    • The first page of the loan estimate includes loan terms, monthly payment and money needed at closing.
    • The second page of the loan estimate includes all of the details of your closing costs.
    • The third page will include any additional information pertaining to your loan request and repayment.
  6. Image titled Apply for a Marriage Certificate in Dwarka Step 11
    Review and sign your commitment letter. If the lender approves your mortgage application, they will send you a commitment letter that will state much of the same financial information that was estimated in the loan estimate. This letter will provide you with the concrete details regarding the amount being loaned to you, the terms of repayment, and the interest you will be charged on the loan.[21]
    • Review the commitment letter thoroughly and ask questions about anything that doesn’t seem right or that you are unsure of.
    • Sign the commitment letter and return it to the lender.

Sources and Citations

Show more... (18)

Article Info

Categories: Mortgages and Loans