How Does a Mortgage Work?

Are you ready to buy a house, but find the process daunting? Are you wondering just how exactly to afford one and how a mortgage works? Luckily, First Security’s lending staff has a wealth of knowledge and decades of experience helping customers buy homes. With their assistance, the challenging process of buying a home can be an easy and pleasant experience.

In fact, your first step is to reach out to a First Security Mortgage Advisor or Mortgage Lender to get pre-approved for a loan. This pre-approval will educate you on a loan amount you can afford so that you can determine which houses are within your budget. You will get a letter from your lender as proof that you have been pre-approved, and this is something you can show your realtor. Oftentimes, a realtor may choose not to show a home until they know the buyer has been pre-approved.

To schedule an appointment for the pre-approval process, give us a call at 800.272.0159. Once scheduled, your assigned advisor or lender will help you begin a formal application. The meeting will usually last no more than an hour, to provide you with time for asking questions about financing options. For example, is a fixed-rate mortgage, an adjustable-rate mortgage, or guaranteed rural housing the right option for you? You can also start with our online application before meeting in person. Many customers find the online application more convenient, as it can be completed at any time of day, at any place, and is usually quicker than an in-person appointment. In addition, you can save your progress at any point during the application and return to it when you are ready to continue.

After deciding on the home you want to buy, you’ll make an offer to purchase. Your realtor will be able to provide invaluable assistance in this area. Once you and the seller of the home have agreed on a final price and other conditions of the purchase, which could include a contingency for you to be approved for a loan, you will tell the lender that gave you your pre-approval that an offer has been accepted.

Next, we will provide you with preliminary disclosures. These documents will give you an idea of what to expect for any fees, payments, and the length, or term, of the mortgage.

Once you have signed and returned the preliminary disclosures, we continue processing your application for a mortgage. This includes verifying your income, assets, liabilities (debts), and other information. We will also order an appraisal, which requires a professional to visit and examine the property you hope to buy. The appraiser makes sure the home is worth the value of the loan you are requesting.

If we determine to go forward with the mortgage process, the next step would be for you to arrange for home insurance. We also offer the opportunity to include your monthly insurance premiums and estimated property taxes in your monthly mortgage payment. This arrangement is called an escrow. You might find this helpful if you like the idea of making smaller, regular payments throughout the year instead of paying individual larger expenses when your insurance and tax bills are due.

Lastly, we can close on the home purchase. On a date arranged in advance, all parties involved with the sale of the home will meet to close the purchase. Loan papers and other documents will be signed, loan funds will be disbursed, and the transaction will be completed. 

Although the time may vary from loan to loan, the above process can usually be completed within 45 days, but you will be in the home you love, possibly forever!