How to get a mortgage: Explained by a loan officer (Podcast)

January 12, 2022 - 6 min read

Learn how to get a mortgage

Getting a mortgage is easier than many home buyers expect it to be. Once you get started with a lender, your loan officer will walk you through the process step by step.

But getting started can be the tough part. How do you find a lender and apply for a mortgage? And how do you know which mortgage is best?

To give you some guidance, loan advisor Ivan Simental explained how to get a mortgage in a recent episode of The Mortgage Reports Podcast. Here’s what you need to know.

Get started on your mortgage process here

Listen to Ivan on The Mortgage Reports Podcast!

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Step 1: Set your budget

Before you can even begin shopping for a mortgage, you need to set your homebuying budget. This means knowing what you can afford to pay upfront (i.e., down payment and closing costs), as well as what you can afford on a monthly basis for your mortgage payment.

You can use our mortgage affordability calculator and down payment calculator to get an idea.

Once you have the numbers crunched, Simental says to keep this budget in mind throughout the entire process of shopping for your loan.

“It will help you stay on track to your goals,” he says.

Keep in mind, mortgage calculators can only give you an estimate. To know your exact budget, you’ll need to connect with a mortgage lender and get preapproved. So finding a lender is your next step.

Get matched with a mortgage lender

Step 2: Determine the type of lender you want to use

Next, you’ll need to consider the type of lender you want to work with. There are several kinds to choose from, including mortgage brokers, big banks, online lenders, and small, local lenders and credit unions.

These all offer slightly different pros and cons:

  • Big banks may be able to get your loan done faster
  • Local banks and credit unions may offer more hands-on help and guidance
  • Online lenders can often be more convenient due to their digital processes and applications
  • Mortgage brokers can take a lot of stress off your shoulders, handling much of the shopping and application process for you

You can certainly consider more than one type of lender in your search, but having an idea of what type you might want to work with can help guide your rate-shopping and make the process more efficient.

Simental also says to tread lightly if you’re considering an online lender.

“Be very careful with online lenders that are advertising super, super low rates,” Simental says. “A lot of the time, they’ll have these hidden fees and very, very fine print that you have to read with a magnifying glass. Nine times out of 10, that amazing interest rate is not free.”

To learn more about comparing rates and terms on your mortgage offers, read How to shop for a mortgage: Tips to compare quotes and rates.

Step 3: Get lender referrals

Now, ask your social circle for lender recommendations. As Simental explains, “My first recommendation would be to ask family and friends, ‘Hey, who helped you buy your house? And how was that experience?’”

Then, if they were particularly happy with their lender’s service, ask for their loan officer or banker’s name and contact info. You can then short-list them and include them when shopping around.

Be careful to ask only people whose opinion you truly trust (and would risk money on). “You want to ask your family, your friends, co-workers, and people that you trust and hold very dear to you,” Simental says.

You can also check out online reviews and ratings once you have a few referrals.

“Go on Google and check the reviews there, or go on Yelp,” Simental says. “That way you can see, alright, they have 100 reviews. And out of these 100 reviews, they have 4.7 stars or 4.5 stars. That’s pretty good in my book.”

Just keep in mind that the best lender for a friend or family member won’t necessarily be best for you. Lenders tailor their rates and fees to each borrower, which is why it’s important to shop around for your best deal.

Step 4: Get a Loan Estimate

You’ll next need to apply for a quote with each of the lenders you’re considering. This usually requires a bit of background information about your credit, income, and the price point you’re considering buying at.

Once you’ve filled out the lender’s application, it will give you a Loan Estimate — a detailed breakdown of all the costs and fees associated with the loan you’re being offered.

“Be very, very careful when the lender gives you an estimate,” Simental says. “Take a look at your Loan Estimate and go line by line and have them explain to you what the items are and what the fees are and what’s associated with the cost of the loan, because sometimes they’ll have hidden fees in there.”

You’ll also want to compare your estimates line by line to make sure you’re choosing the best possible deal out of the bunch.

Compare offers from multiple lenders. Start here

Step 5: Ask questions

Finally, ask plenty of questions with the lenders you’re considering. Make sure you feel comfortable with them and that you’re confident in their abilities, knowledge, and skill set.

“This is probably going to be the largest purchase that you are going to be making, so ask questions,” Simental says. “Ask ask ask.”

Simental recommends asking about fees, closing timeframes, the underwriting process, and more.

You should also ask about pre-approval. Is it simply a pre-qualification, or do they offer fully underwritten pre-approval that can ensure a hiccup-free closing (and give you a leg up in negotiations)?

You should also discuss communication styles. You want a lender that communicates with you in the way you’d like to communicate. Are they responsive via phone? What if you prefer to text and email? Get an idea of the response times you can expect and how available they are to questions.

Step 6: Shop around

It might seem daunting to contact several lenders and get Loan Estimates and information from each of them, but doing so could save you significantly upfront and in the long run.

It will also impact the service you’ll receive and your entire experience during one of the most important transactions of your life. So be prepared to put in a little elbow grease to find the right fit.

According to Jon Meyer, The Mortgage Reports loan expert and licensed MLO, finding the right loan officer is especially important in today’s competitive real estate market.

“When searching for a loan officer for a purchase, I truly believe it’s more important to find a knowledgable and efficient one who can close as fast as possible over the one who can save you a fraction of a percentage point,” Meyer says.

He adds, “The speed of closing is going to be a huge point the selling side will look at in offers that aren’t all-cash.”

When you’re shopping around, therefore, be sure to ask potential lenders about their time to close and how reliably they can meet those timelines.

Step 7: Complete your application and close

By this point, you’ve set your budget, gotten preapproved, compared rates, and chosen a lender. Provided you also have a signed purchase agreement for the home you want to buy, the rest of the process should d be fairly straightforward. With your loan officer’s guidance, you will:

  • Complete your mortgage application
  • Turn in all required documentation
  • Get the home inspected
  • Get the home appraised (your lender will order the appraisal)
  • Wait for your mortgage lender to finish underwriting the loan
  • Receive final approval
  • Sign your final papers
  • Pay the cash to close (down payment, closing costs, and any other upfront fees)

As a final piece of advice, it’s smart not to make any big financial changes when you’re in the mortgage process.

For instance, don’t quit or change jobs, take out a new loan, open new credit cards, or make any big purchases prior to closing. These types of moves can change your financial profile and potentially put your mortgage approval in jeopardy.

Keep to the status quo and follow your loan officer’s advice to give yourself the best shot at a smooth and timely mortgage process.

Start your mortgage process

Are you getting serious about buying a home? Then now is the right time to get your financing in order.

To start, reach out to at least three lenders. Apply for pre-approval with each one, then carefully compare the rates, terms, and fees you’re offered. Then you can choose the lender with the best deal for you and move forward with a full application.

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Time to make a move? Let us find the right mortgage for you

Aly J. Yale
Authored By: Aly J. Yale
The Mortgage Reports contributor
Aly J. Yale is a mortgage and real estate writer based in Houston who has contributed to Forbes and worked for organizations such as The Dallas Morning News, PBS, NBC, and Radio Disney.