The Loan Process

1

Getting Organized

Financing begins by gathering materials. To prepare for your loan application, we will collect the required financial information, from proof of income to ongoing monthly debts. For example:

  • Last two recent paychecks
  • Most recent W-2 and tax returns
  • Most recent bank and other asset statements
  • Residential history for the past two years
  • Current real estate holdings
2

Calculating Your Budget

Preparing for the mortgage loan application includes estimating your monthly mortgage payments to help determine which loan works within your budget. You can calculate your “Debt-to-Income Ratio,” or DTI, by taking your total monthly debt payments and dividing them by your total monthly income. Most mortgage companies use a DTI of 45% to determine the amount you can borrow.

To calculate your home budget:

  • Multiply your gross monthly income by 45% to get your total max payments.
  • Subtract your current monthly debts from your total max payments.
  • The resulting number is your new home budget payment.

Monthly mortgage payments are split into four different components, (PITI):

  • Principal: goes toward the loan amount that you owe.
  • Interest: goes toward the interest that your lender charges.
  • Taxes: goes toward your local property taxes.
  • Insurance: goes toward your homeowner’s insurance coverage.
  • There may be additional payment obligations, such as HOA fees and Private Mortgage Insurance (PMI).
3

Setting Up Your Pre-qualification Game Plan

Now it’s time to determine if you’re likely to qualify for a loan by submitting a pre-qualification application. Fairfield Home Lending’s pre-qualification service is free to use and does not obligate you to remain with us in the future. We simply offer you a hand during this process to help you feel secure in a solid financing strategy that makes for an easy mortgage. During the pre-qualification process, your loan originator will:

  • Explain the entire process to you, answering any questions you may have.
  • Review your income, assets, debts, and credit to establish where you stand.
  • Go over the different mortgage options and help you find one that’s right for you.
  • Work with you to set up a financing strategy for buying your new home.
4

Applying for a Loan

Once we receive your request, a licensed Fairfield Home Lending Mortgage loan originator will contact you to review your information, address your questions or concerns, and provide you with a detailed explanation of mortgage interest rates and closing costs. Remember to keep your 2-2-2 handy—two years of tax returns, two months of recent bank statements, and two pay stubs—for your loan application.

5

Getting Ready for Closing

Closing on a loan typically takes 45-60 days in which you will send your completed mortgage application to your lender, review all materials, and make any changes. As you prepare for your estimated closing date, consider all of the following:

  • Review your application and let us know if anything has changed.
  • Talk to your loan originator about locking in your interest rate.
  • If you’re saving funds to close, check with your loan originator to see how you are tracking.
  • Select an agent for hazard insurance, and have them contact your loan originator to get set up for closing.

Closing on a loan typically takes 45-60 days in which you will send your completed mortgage application to your lender, review all materials, and make any changes. As you prepare for your estimated closing date, consider all of the following:

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