As a first-time homebuyer, navigating your way through the uncharted waters of the homebuying journey can seem a bit daunting. That is, unless you have a lending terms glossary on hand - and who has one of those?
We know that when shopping for a home there are a few topics you might stumble upon with confusion, that’s why we’ve made a list of terms during underwriting that you should educate yourself on so when closing time comes – you’re prepared.
Upfront underwriting, sometimes referred to as “To-Be-Determined” (TBD) underwriting, is a process where the lender issues you a conditional approval with a dollar amount within hours of meeting with you, by having all of your info go through an underwriter at the beginning of the process rather than towards the end.
Underwriting is the review of your loan application to ensure you would be a good fit for a loan. There are lots of steps that fall under this term.
1) Pre-qualification -When you get pre-qualified, you receive an estimate of how much you can borrow based on your financial information. This helps you decide if you’re ready to apply for a mortgage loan. It all starts with a conversation with a mortgage banker.
2) Credit - Your credit score takes the info in your credit report and creates a number that represents many things such as your payment history, length and type of credit, how much credit you use, how much credit you have available and how many times other lenders and creditors have pulled your credit information.
3) Down Payment - A down payment is the out-of-pocket money you pay upfront to the home's seller. This payment is communicated as a percentage of the total selling price of the home. Once the down payment is made, the remaining amount is what you would borrow from your lender.
4) Upfront Underwriting – Getting a conditional approval from your lender upfront will have the exact dollar amount you qualify for, so you know just how much you can afford.
As you can see, there are plenty of parts to the underwriting process. By getting yourself acquainted with these terms, you truly set yourself up for success when it comes to getting the home of your dreams! Underwriting is a crucial part of the lending process and we’re ready to help you get started. Contact one of our mortgage bankers today!