Step 4—Formally apply and close.
Once you have found your home and the purchase contract signed, the final step in getting financing is to formally apply with your selected lender. Follow the approval process closely, continually asking for explanations and corrections to any discrepancies with earlier estimates or higher than expected charges. Request a copy of the HUD-1 settlement sheet three days in advance of scheduled closing. After everything is squared away and you're officially approved, you can close on your new home.
Step 1—Determine your financial picture and health.
Take a detailed look at all aspects of your finances. Try to determine how much you can put down and the monthly payment you can afford. Check your credit reports a few months prior to shopping for a loan in order to be aware of and correct any errors or outdated information. Once any errors are corrected, check your FICO score. Your real estate broker can connect you with financing experts who can help guide you through these steps.
Step 2—Shop for a mortgage.
Once you have a clear picture of what you can afford and your financial health, it's time to shop for a mortgage. Determine the benefits to various mortgage types, which type best suits you, and the lenders with the most competitive packages for each. It is recommended to reach out to multiple financial institutions to get the most competitive terms. Don't forget to look at the full cost and every feature of each mortgage package, including but not limited to: interest rate, points, annual percentage rate (APR), rate lock costs, debt-to-income limits (DTI), loan amount, turn time, and junk fees.
Step 3—Get a pre-approval letter.
After you've chosen the mortgage type and lender that works best for you, you'll want to obtain a pre-approval letter from them. This will speed up the buying process since it represents to the seller that you are financially qualified and it will state the maximum loan amount you can expect from your lender.
*Only apply to condominiums and townhouses, not to cooperatives.
Please note that the above are only estimates. Consult your mortgage broker and/or accountant to confirm closing costs for your specific transaction.
Origination Costs - Points
Mortgage Recording Tax*
Title Insurance, Title Search, & Recording Fees*
Application, Credit Check, etc.
Real Estate Tax Escrow
0% - 3% of loan value
1.8% of purchase price if $500,000 or less | 1.925% if over $500,000
Approximately 0.5% of purchase price
$500 & up
$500 & up
$275 & up
$200 to $400
$50 & up
$17 per document plus $5 per page
2 to 6 months (verify with bank)