The roadmap to a smooth and positive homebuying experience.
Congratulations on beginning your homebuying journey! This may be one of the most important financial moves you make in your lifetime. We’re here to help make the process as easy and enjoyable as possible. Let’s get started.
Home Loan Pre-Qualification
A great first step in your journey to becoming a homebuyer is to get pre-qualified. This will help give you peace of mind during your home search and throughout the entire loan process. There are many benefits to home loan pre-qualification:
Determine How Much You Can Afford
Pre-qualification gives you a picture of how much you can afford on a home based on your credit, income, and debt. This will help guide you to search within your budget, including how much you will need for a down payment and closing costs.
Understand Monthly Payments
You’ll get a close estimate of what your monthly principal, interest, taxes, and insurance (PITI) could be so you can set expectations for your cost of living.
Find the Right Loan Program
With the wide variety of home loan programs offered by Supreme Lending, you’ll get a good idea of which types you qualify for and which loan program will be the best fit for your individual situation.
Strengthen Your Offer
Offers from pre-qualified buyers are often more attractive to sellers. It lets them know you’re already working with a lender like Supreme Lending, you are credible, and serious about the property.
Save Time
Pre-qualifying also helps identify any potential roadblocks to avoid surprises down the road and sets you up for a smooth, quick closing. Taking care of everything beforehand will give you one less thing to worry about when purchasing your property.
Determining the Loan Program That is Right for You
Supreme Lending offers a wide range of mortgage programs for you to choose from. This list will help give you an idea of the type of home loan that may be the best fit for you. We’ll work with you to help you make an informed decision.
Fixed-rate mortgages. This term refers to a home loan that has a set interest rate for the entire life of the loan. These are the most popular type of loan, and the most common fixed-rate term is a 30-year home loan.
Adjustable-rate mortgages. An adjustable-rate mortgage, or ARM, is a home loan with an interest rate that can change periodically based on the market. ARMs start with lower monthly payments than fixed-rate mortgages, but typically go up over time. The most popular type of loan is a 5/1 ARM.
Conventional home loan. A conventional home loan is a loan offered by a private lender, like Supreme Lending, rather than through a government agency. Conventional loans often have lower interest rates, but require good credit to qualify.
FHA home loan. An FHA mortgage is backed by a government agency, specifically the Federal Housing Administration. These types of mortgages typically have less strict credit requirements.
VA home loan. A VA mortgage is also secured by a government agency, the U.S. Department of Veteran Affairs. VA loans offer no down payment options and more lenient credit requirements for active-duty service members, veterans, or surviving spouses.
USDA home loan. USDA mortgages guaranteed by the U.S. Department of Agriculture. Properties must be located within specific areas outlined by the agency in order to qualify.
Jumbo loan. A Jumbo loan is a type of conventional loan that exceeds the conforming loan limits for the area. Because of the higher loan amounts, these loans typically have a higher rate of interest and borrowers must meet stricter requirements to qualify.
Important Requirements for Obtaining a Home Loan
The most important requirements for pre-qualification are down payment, credit score, a healthy debt-to-income ratio. You will also need to keep closing costs in mind.
Down payment. This is the money you will need to pay upfront to offset the amount you need to borrow. The amount you need for a down payment will depend on the loan type you are planning to get. Some loan types have no down payment requirements, such as VA loans and USDA loans.
Credit score. Your credit scores indicate how likely you are to repay what you borrower. It is one of the most important factor lenders consider when you apply for a mortgage. Having a good credit score makes the process easier and typically qualifies you for a lower interest rate.
Debt-to-income ratio (DTI). Your debt-to-income ratio is all of your monthly debt payments divided by your gross monthly income. Different home loan products will have different DTI limits.
Closing costs. Closing costs are paid upfront necessary expenses associated with obtaining a home loan. You’ll receive a Loan Estimate (LE) outlining these charges. Here are the most common costs associated with closing:
- Loan origination fee
- Appraisal fee
- Credit report fee
- Title insurance fee
- Escrow account funds
- Document preparation fee
- Prepaid interest.
Finding the Right Home
It’s important to work with a qualified Real Estate Agent in your home search. There will be several factors you will want to determine to find just the right place for you. Here are a few of the things you will want to consider before applying for your home loan.
Home type. The most popular type of home purchase is a detached single-family home. Mobile or manufactured homes, condos, and town homes are other popular home types.
Property age and condition. In general, you’ll likely find it cheaper to buy an existing home rather than a new home. But keep in mind that older homes may be less efficient and need more repairs.
Quality of schools. School assignments are based on where a student lives. As a buyer, you can’t typically move to an area and then hope that it has a good school district.
Proximity to your job. If you are not a remote worker, living close to work can give you much more time before and after work and can lead to less stress and less money spent on gas.
Neighborhood. For many buyers, quality of neighborhood is the most important factor determining the home location. Your neighborhood will be the community in which you and your children will grow into.
Monthly costs. Consider all of the costs associated with owning the home you want to purchase, not just the mortgage. Other costs may include HOA fees, property taxes, insurance premiums, utility bills, home maintenance, and repairs.
Steps of the Home Loan Approval Process
Here’s a basic breakdown and behind-the-scenes look of the home loan approval process. Remember, the team of local mortgage professionals at Supreme Lending is here to answer your questions every step of the way.
- Completion of the official home loan application. You will need to submit all remaining requested documents to complete your official loan application. With this information, Supreme Lending will set your mortgage terms, lock the rate, and go over any specific transaction items.
- Home valuation and title insurance. Supreme Lending will order an appraisal to determine if the fair market value of the property meets the purchase price and loan guidelines. This also ensures a clear title for transfer of ownership.
- Underwriting. Your completed file and documents are submitted to our Underwriting team for review to ensure compliance with loan guidelines and to get approved. Conditions for additional information may be requested to clear the file for final approval.
- Clear to close. Our three favorite words in the home loan process. Once you have received the official clear to close, your documents will be prepared for closing. A final closing disclosure (CD) will be available for your review, and closing date scheduled.
- Closing day. You will sign your closing documents with the title company to transfer the funds and ownership, and get the keys. You’re now a new homeowner.
Your Monthly Mortgage Payment
A monthly mortgage payment includes several components often referred to as PITI: principle, interest, taxes, and insurance. Any condo fees or Homeowners Association (HOA) fees may also be a factor.
Principal. The original balance of the home loan and the subsequent balance of the home loan after each payment is made, excluding interest.
Interest. The charge for the use of the home loan calculated based on principal.
Taxes. Your local assessor determines the property tax based on the value of the home. Taxes are typically charged annually but can be rolled into monthly installments and paid using an escrow account.
Insurance. Depending on the type of loan, homeowner’s and mortgage insurance may be required and added to the monthly payments.
Finding the Right Lender
Supreme Lending is proud to be a leading lender in the state of Florida. We are your local mortgage lender, and we would love to be your go-to source for home loans.
We are committed to helping our Florida customers achieve their homeownership goals, and we are committed to making the process simple and enjoyable from beginning to end.
Getting started is easy. Contact us today to get started on your journey to homeownership.