When it rains, it sure does pour! Not only did the inside of your home look like an olympic-sized swimming pool due to the leaking roof, but you also had to play hopscotch on your broken living room tiles to avoid certain death by electrocution! What a scare! You are well within your right to question not only the infrastructural integrity of your home but also the safety and security of it.
Now for just a few seconds, let’s dream together. What type of home do you envision when you think about safety, security and comfort for your family and self? Does it look like a game of electric hopscotch or are you relaxed and maintain a feeling of security? Perhaps it’s time that you consider that big leap into home ownership to secure a space fit for creating happy and long-lasting memories with your loved ones. Taking out a mortgage is a big deal but it is also how most people buy their first home. Understanding the crucial steps to applying for a mortgage loan can make all the difference in securing your dream home and while it is daunting process, it doesn’t have to be.
A “Mortgage Loan” or simply “Mortgage” is a type of secured loan used to purchase or maintain any type of real estate, whether it be a home or parcel of land. The borrower agrees to pay the lender, generally in a series of regular monthly payments that are divided into principal and interest over a period of 15 to 30 years. For the typical homeowner, a monthly mortgage payment is either their largest or, after income taxes, second largest expense item in their monthly budget. Since it is a “secured loan” this means that if monthly repayments are not met, the lender has the right to repossess the property. With home ownership, one of the biggest hurdles is coming up with the down payment and for this reason, many persons turn to a residential mortgage.
For first time home owners, applying for a mortgage is considered a big financial step but with proper guidance and the right information, you can be well on your way to building your future home. Here are the basic steps provided by our RealFin real estate experts to help ease your mind.
- Determine how much you can afford.
Before applying for a mortgage or starting the process of looking for property or drawing a house plan, know exactly what you can afford. Be sure to consider your monthly income, existing expenses and length of payment. RealFin experts recommend that a mortgage payment should never exceed 28-30% of your monthly income.
- Review your financial credentials.
Belize does not have a credit bureau so a credit score does not exist like in other countries. You are considered in good financial standing and likely to be granted a mortgage with favorable loan terms when your financial review shows up-to-date personal debt, fully paid credit cards or no late payments on hire purchases.
- Gather necessary documents.
Lenders will require up-to-date documentation which include, but not limited to; identification card, proof of income, proof of address (e.g., utility bill), bank statements and investment statements (existing loans).
- Find a lender that suits you.
Choose the lender who can offer the type of mortgage that is right for your budget as this is vital in the long term. They will guide you with the most relevant information regarding their mortgage application process.
- Submit an application.
Your lender will provide you with information about their application process and all the other necessary financial information they require. During this process your application will be reviewed, verified and assessed for financial stability.
- Receive a pre-approval.
After your application is reviewed and your lender sees you as a suitable investment, you will be provided with a pre-approval letter. This is a document that outlines the size of the mortgage loan you are approved for and the terms and conditions by which you must follow. The length of time it takes to get a pre-approval letter can vary depending on a variety of factors including, but not limited to, the lender’s process, the complexity of the borrower’s financial situation, and the responsiveness of the borrower in providing necessary documentation. In general, it can take anywhere from a few hours to a few days to receive pre-approval once all the necessary information is provided to your lender.
- Find a property and make an offer.
With your pre-approval letter, you can start looking for a home or property that fits the loan you are approved for and make an offer through your real estate agent.
- Receive a mortgage commitment and close the loan.
Your lender will then review the chosen property, finalize the mortgage commitment and close the loan. The funds to purchase your new property will then be made available. On average, it can take between 30 to 45 days to close a mortgage loan, but it is important to note that this timeline can vary and some loans may close more quickly or take longer. It is a good idea to work closely with your lender and real estate agent to stay on top of the timeline and ensure that all necessary steps are being taken to close the loan as efficiently as possible.
The road to applying for a mortgage is not always as smooth as these steps and it is important to note that one can be denied for a mortgage loan even when all the steps are followed. Our RealFin experts have found that most clients who get denied for mortgage applications do so because they apply for loans that are not sustainable with their existing expenses. For this reason, we recommend a RealFin assessment prior to applying for a mortgage. Doing an assessment before applying for preapproval saves a lot of time and money. It also helps with establishing structure throughout the process and in the long term. RealFin offers a detailed evaluation focused on assessing the client’s financial abilities with the cost of the potential home, legal fees, age of client and length of term of payment of the lending institution of interest. We’ll help you to examine the most sustainable financial options to obtain your new home or property; and because RealFin has partnered with some of the best lending institutions and contractors in the country, the process is also hassle free! Our RealFin experts have aided multiple clients in successfully securing a mortgage for their forever home. We pride ourselves in bringing you closer to your dreams, one step at a time. Prioritize your comfort and security and call RealFin today!
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