How to get a Mortgage

Get all your documents in order to streamline the mortgage application process


After you view real estate listings online, it's time to get down to business and see some of the homes that peak your interest in person. But before you meet with a real estate professional, it is best to get pre-approved for a mortgage. A mortgage, by definition, is the loan you will need to borrow from a mortgage lender to purchase a home.

It's important to note that a monthly mortgage payment is more than just repayment of the loan with interest. In that monthly payment, there are also property taxes, insurance on the property, and PMI (private mortgage insurance), which is required by loan institutions if you are borrowing more than 80% of the home's value. In other words, your down payment is less than 20% of the home, than you would need to purchase PMI.) For the purpose of figuring out how much they can loan you, financial institutions will estimate the cost of these extras and factor that in to the equation of how much you are allowed to borrow.

Applying for a Mortgage: What You Will Need

Work history

  • W2 forms from past two years
  • Pay stubs for past 3 months
  • Borrowers tax returns for past two years
  • If you are self-employed, business and personal tax returns for past two years, year-to-date profit and loss statement and balance sheet

Total Debt

  • Names, balances, and account numbers for all credit cards, store lines of credit, student loans, auto loans, and any other debt with monthly payments, including alimony payments and child support payments (You may need to bring a copy of your divorce decree and the court-ordered amounts that you pay.)

Proof of your down payment

  • Bank statements from the previous two months showing account balances

Investments and assets

  • Two months of statements of any stocks, bonds, or other investment accounts
  • Retirement account statements (401K and IRA)

Residence history for previous two years

  • If you rent, the name and phone number of your landlord
  • Proof of current mortgage or documentation of payments and status

Mortgage Pre-Approval

Pre-approval is a very detailed and thorough financial process completed with your bank or mortgage lender. It will provide you a letter that states that the loan brokerage or bank has reviewed your finances and are willing to loan you a specific amount of money to buy a house, once you find one.

Benefits of Pre-approval:

  • It will show you which homes you can actually afford, and prevent you from wasting time on ones that don't fit your budget
  • It will help you make an offer more quickly and one that sellers will take seriously
  • For any bank-owned property (Real Estate Owned or REO, which are foreclosures for sale), buyers need to be pre-approved in order to make an offer

In order to start the process, you'll need to do a little research or get recommendations and find your mortgage lender or broker. Look at their lending rates and do an interview over the phone to help you decide which one seems on top of their business and will work to make everything come together smoothly and on time for your home purchase.

Mortgage Types: An Overview

As you narrow down the search criteria for a home, your mortgage broker can tell you about financing programs specific to your needs and the benefits or drawbacks of each type of loan. Here are some common types of loans:

  • Fixed-rate mortgages have the same interest rate (the percentage of added cost for being able to borrow the money) for the entire span of the loan.
  • Adjustable rate mortgages (ARMs) mean your interest rate may change throughout the life of the loan.
  • In a conventional mortgage, a private lender assumes the risk of losing its money if you default on your loan.
  • A government-backed loan is insured by the government, meaning the government is not the lender, but it does promise to pay back some or all of the lender's money if the borrower defaults. This reduces the risk for lenders when it comes to foreclosures. These types of loans may be a good option for anyone who may not qualify for a conventional loan. Government-backed loans tend to have a lower down payment requirement and less-stringent credit score requirements, though they may carry a higher interest rate. Examples of government-backed loans include:
    • FHA loans: These loans work well for first-time home buyers and are an option to anyone who qualifies. They typically provide competitive rates, less-stringent credit requirements and lower down payments than other types of loans.
    • VA loans: Available to eligible veterans and their spouses only, these loans offer low down payments and lower interest rates.

What's Next?

With a pre-approval in hand, your real estate agent can come up with a list of properties in the general price range of homes for sale that you should be looking at. You're ready to house hunt!

MLS Property Information Network. Inc. The Total Listing Service
Neren MLS New England Real Estate Network
Maine IDX
Equal Housing Opportunity

©2020 MLS Property Information Network, Inc; The information in this listing was gathered from third party resources including the seller and public records. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations or warranties as to the accuracy of this information. 
Copyright 2020 New England Real Estate Network, Inc. All rights reserved. This information is deemed reliable, but not guaranteed. The data relating to real estate displayed on this Site comes in part from the IDX Program of NEREN. The information being provided is for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data last updated October 25, 2020. 

Listing data is derived in whole or in part from the Maine IDX and is for consumers' personal, noncommercial use only. Dimensions are approximate and not guaranteed. All data should be independently verified. © 2020 Maine Real Estate Information System, Inc. All Rights Reserved

© 2020 BHH Affiliates, LLC. An independently owned and operated franchisee of BHH Affiliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of Columbia Insurance Company, a Berkshire Hathaway affiliate. Equal Housing Opportunity. View our Privacy Policy

Website Powered by Real Estate Web Solutions

©2020 Real Estate Web Solutions, LLC. All rights reserved. realOMS Login | Switch Mobile Site