The Mortgage Process

Here's an overview of how the mortgage process works.

Determine how much you can afford

This is an important first step on your road to home ownership. Three key costs to consider are:

• Down payment — The part of the property purchase price paid in cash and not financed with a mortgage. One thing to consider is that the larger your down payment, the lower your monthly mortgage payments will be.
• Closing costs — Cash due at closing for expenses you and the seller pay to complete the transfer of ownership. Closing costs are typically based on the home price and vary according to location. They might include an origination fee, attorney's fee, initial escrow payments, and charges for obtaining title insurance and a survey.
• Monthly payments — When you are approved for a mortgage loan, you make a commitment to pay back the loan on a monthly basis. Your payment is based on both the principal — the amount of the loan — and interest — the amount you pay to borrow money, calculated as a percentage of the amount borrowed. It also includes money that may be held in escrow for taxes, homeowner's insurance and mortgage insurance.

There are a variety of loan options that can reduce or increase each of these costs. Use our Home Calculators to help you determine the amount you're comfortable spending. Then talk to one of Klacik Real Estate's professionals who will help you find the mortgage company that's right for you.

Get Pre-Approved

Most real estate agents will ask you to get pre-approval before they show you homes. You and the agent won't waste time looking at houses that are too expensive because you'll know for sure which houses are in your range. You'll place every bid with confidence because you'll have the letter—and the financing—to back it up. All of which helps you stay more focused on finding the dream home you can make a reality.

Make an offer

Once you find the home you want, your real estate agent can provide you with a list of comparable homes (known as "comps") recently sold in the area. Comps help you determine the right price to offer. There are other factors to consider, including the condition of the home, the cost of necessary repairs, and your or the seller's time restrictions. Any offer you make could become legally binding, so consult with your agent beforehand.

The loan commitment

The loan commitment takes place once the lender approves the loan and the property itself. That means a home appraisal ensuring that the home meets the lender's guidelines, and a title search ensuring there are no outstanding liens on the property are needed.

Home inspection

Your offer should contain provisions for a home inspection by an accredited home inspector and an outline of actions to be taken if problems arise. The inspection should cover interior and exterior structural elements as well as heating/cooling, and electrical and plumbing systems. It's a good idea to be present during the inspection so you can ask questions about the property.

Closing

At the closing, funds are transferred and all applicable paperwork is signed to finalize the transaction. Your lender will help you prepare for closing. This includes providing you with an estimate of any fees due at the closing.

Once the papers are signed, the fees are paid, and the deed is recorded in the courthouse, you'll get the keys to your new home.