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Buying a home might be the most exciting, perplexing and straining financial transaction that you ever undertake. Even if you have done it several times you can still find the process complicated and intimidating, particularly when it comes to getting mortgage financing. Reams of loan documents, little known terminology and concern serve to temper the joy of buying a new home. As soon as the sales offer and contract is signed, taking on the financing for the purchase becomes primary for all but a very few buyers. If you deduce the steps required to qualify for a mortgage, however, much of the stress can be avoided. The following explanation of the loan application interview process is intended to help you through the complexities of qualifying for a mortgage.

The Loan Application Interview

Once you have elected a mortgage lender, the following step will likely be a consultation with a loan officer or other lender representative, whose task is to begin the attaining of information the lender needs to approve the mortgage. They will illustrate the types of mortgage loans available to you, the interest rates and fees for each type and the qualification requirements. It is at this time that you will complete the loan application paperwork

By this time you should have a good idea of the general interest rates and fees being charged in the area. The total cost of a mortgage loan consists of the interest rate on the loan, origination fees, discount points, and miscellaneous other charges. The interest rate affects the amount of the monthly payment, while points affect the amount of cash you must have at closing. Most lenders will offer a range of interest rate/point combinations to meet the borrower needs. In general, the higher the interest rate, the lower the points. For example, if the current market provides for an 8.5 percent interest rate with 2 points, a nine percent rate may be offered at no points. If you are a first-time home buyer, the larger monthly payments on the 9 percent loan may be easier to handle than the 2 points that will require additional cash at settlement. The loan officer is prepared to explain all of the mortgage information and your options to you when buying a home.