Guide to Finance

Easy 5 Step Guide to a Home Mortgage

No matter if you are considering buying your first home, or your fifth, there is always some uncertainty surrounding the mortgage process.

French Brothers Homes is committed to help you by providing a few simple steps you can take to get prepared and feel confident in your home buying decision.

1. Get Your Ducks in a Row

• It’s important to take stock of your financial situation.
• Gather some recent pay stubs, W-2’s or tax returns.
• Collect your recent statements for any loans or revolving credit.
• Figure out how much household income you have before taxes.
• Make sure to include overtime, bonuses, or commissions.
• Project your household income for an entire year, then divide by 12 to get your “monthly gross income”.
• Next, estimate your monthly debts.
• These debts may include car payments, student loans, credit card payments, or even child support payments.
• Do not include any “bill payments” such as day care, cell phone, cable, or utilities.
  Also, you should not include any debts that will be paid off in the near future.

2. Your Home Budget

• To determine what your house payment should be, you need to first calculate your “Debt-to-Income Ratio” or DTI.
• 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 x 45% = total max payments.
• Your total max payments – your current monthly debts = new home budget payment.

3. Set Your Game Plan

Once you have taken a look at your income and debts, the next step is to get pre-qualified by a professional licensed mortgage lender.

During the pre-qualification process, your Mortgage Officer will:

• Help explain the entire mortgage and home buying process to you.
• Answer any questions or address any concerns you may have.
• Review your income, assets, debts, and credit with you to establish how much home you can buy.
• Tell you about all the different mortgage programs there are and help you decide on the one that’s right for you.
• Work with you to set your game plan as to what the next steps are for you to buy your dream home.

4. Apply for your loan

Now that you have your financial data already organized, applying for your loan is a snap! Just visit with our sales professional to meet with our preferred lender and fill out a loan application.

We will review all the documentation needed to complete your home closing, and provide you with a detailed explanation of mortgage interest rates and closing costs.

Lastly, we will go over the “next steps” in the process. This is important so that you can feel comfortable, knowing what to expect along the way. It takes a lot of teamwork and communication to get a mortgage loan to the finish line. And we are very happy to have you as a team member on your loan!

5. Funding and Closing

As your new French Brothers home nears completion, it will be time to start preparing for your closing. Around 45 days prior to your estimated closing date, you will want to begin making final preparations. This is a good time to touch base with your French Brothers preferred lender. Your mortgage officer will be able to discuss the current interest rates, and see if you want to lock-in your rate. Your loan processor will begin to update your loan file with current information.

Additionally, you will need to get your hazard insurance lined up, and ready for closing. When you have selected your insurance agent, you can have them contact your loan processor to make sure they are all set for closing. Lastly, when the closing day arrives, you will sit down with a title agent to do your final paperwork. At the closing, you will be asked to bring your photo ID and your funds for closing. Your title agent will tell you the exact amount to bring, and will give you detailed instructions. Then there’s nothing left to do…but move in!

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