BUYING A HOME
Better rates. Faster funding. Happy homes.
Reali Loans is how lending should have been all along: simple, stress-free, and affordable.
Reali Loans is how lending should have been all along: simple, stress-free, and affordable.
WHY REALI LOANS?
It's your money. Get more for it.
Instant rate lock
Tired of waiting for days to know what you'll owe? Get your loan estimate in seconds, and lock your best rate instantly.
Simple process, fast funding
Our smart tech and paperless process make providing documentation a breeze. They also make possible our great rates and speedy process.
Dedicated Loan Officers
Going digital doesn't mean you sacrifice service. Support is there when you need it, however works best for you — by phone, email, chat, or text.
HOW REALI LOANS WORKS
At Last, Mortgages Made Easy
Get pre-approved to find out how much home you can afford and let the sellers know that you are a serious and credible buyer.
Complete the application.
Find your best rate in seconds. The loan estimate shows you what loan terms to expect, should you choose Reali for your mortgage.
Found a great rate? Safeguard yourself from future rate increases by locking your preferred rate. If you qualify, you'll receive an email inviting you to lock your rate online.
Connect with your Loan Officer.
Your Loan Officer will work with you throughout the journey. Once we have everything we need, your loan is sent for processing and underwriting.
Reali funds your mortgage!
Now, it's time to schedule your signing appointment! After it's complete and funds are received, your loan is disbursed within a few days.
WHY CHOOSE REALI?
Compare us to the rest, then choose the best.
Other Digital Lenders
$20,000 average savings over the lifetime of the loan*
No lending fees or commissions
Varies wildly, though some offer no-fee loans
1% origination fee, additional charges for rate lock
As fast as 21days
Typically 45 days
Mostly online, with some steps offline
Half online, half off
Dedicated Loan Officer as single point of contact
Different people at different steps
Just hope the on-hold music is good
REALI CASH OFFER
Buying in California? Cash Offer is the edge you need to land the home you love.
How to Get a Mortgage
If you are looking into buying your first home, it’s crucial to understand the mortgage process and ways to set yourself up for success. Below, we discuss what you should know about how to get a mortgage loan, the different loan types available, and the most common home loan questions.
Review Your Financial Health
Wondering what mortgage lenders look at when they consider you for a home loan? They typically review your financial health and look at a number of different factors, including:
- Income. Income is one of the top things lenders look at when you apply for a first time home buyer loan. You don’t need to earn a specific amount in order to purchase a home, but your lender needs to know that you make enough to pay back your mortgage loan. They will likely consider factors like your monthly household income, job history, and other income types, such as alimony or child support.
- Property type. The kind of property you are looking to buy can also impact whether or not you qualify for a home loan and the type of mortgage loan you receive since various kinds of property can change the risk levels for the mortgage lender. For example, if you plan to purchase a small home that you will use as your primary residence, you are more likely to receive the loan with better terms since your mortgage lender knows that housing costs already factor into your budget.
However, an investment property is a riskier property type for mortgage lenders since you are typically less likely to pay your loan for this type of property during financial distress. Mortgage lenders will usually ask for a higher credit score and a larger down payment when you apply for an investment property loan.
- Credit score. Your credit score and credit history can both have a significant impact on your ability to get a home loan. If you have a high credit score, your mortgage lender is more likely to give you the home loan. This is because they can see you haven’t borrowed too much money in the past and most of your payments are on time.
However, if you have a lower credit score, you are much less likely to get approved for a home loan. This is because mortgage lenders can see a history of poor financial management. There is no set credit score for a home loan, however it’s crucial to build your credit score as high as possible in order to qualify for the best mortgage interest rates.
If your credit score is lower than 600, we recommend taking a few months to increase it before applying for a mortgage loan. Doing so will likely save you money on your mortgage as you can qualify for lower interest rates with a higher credit score. Conversely, the lower your credit score is, the more money you will pay in interest over the duration of your loan.
To optimize your approval chances, you’ll need to work on increasing your credit score. This includes reducing your credit card balances, making all of your payments on time, and bringing any of your past-due accounts current. You should also review your credit report and contact the reporting bureau as soon as possible if you find any errors.
- Assets. Mortgage lenders also look at your assets when you apply for a home loan. If you have savings in your bank account, your lender knows you will be more likely to pay your mortgage loan during times of financial hardship. Your assets include any kind of account from which you can take cash out, including your retirement accounts, taxable investment accounts, and savings accounts.
Determine Your Budget
When discussing how to get a mortgage, you must first determine your home-buying budget. You need to know what you can realistically afford before applying for a home loan. When estimating your budget, make sure to factor in the down payment, the closing costs, the taxes, the monthly payments, and the interest rates, as well as homeowner costs such as insurance and renovations.
Most experts say you shouldn’t spend more than about 30% of your gross monthly income on your mortgage and any home-related costs. For example, if your household income is $10,000 per month before taxes, you should not pay more than $3,000 total per month in home-related costs, including your mortgage, taxes, interest, insurance, and renovations.
Another way to determine how much home you can afford is by calculating your debt-to-income ratio, also known as your DTI. You can calculate it by adding up all your monthly debt payments and dividing that number by your gross monthly income. Many lenders accept maximum ratios of 45%, so if your DTI is higher than this number, you should ideally wait to purchase a home until you decrease your debt.
We also recommend considering all of your monthly expenses, including your savings goals, groceries, childcare, transportation, healthcare, and medical expenses, and entertainment, when calculating how much home you can realistically afford. You wouldn’t want to spend too much on your home and not be able to afford your other living expenses.
Types of Mortgages to Consider
Want to learn how to get a home loan? After establishing how much home you can realistically afford, we recommend considering the different types of mortgages available to you. Doing so makes it much easier to understand which mortgage is best for your particular situation.
Conventional or Government-Backed
There are two primary mortgages out there, including:
- Conventional loans. Conventional loans are an excellent option for borrowers with good credit scores and enough money for at least a 20% down payment. These kinds of loans are available through most banks and independent mortgage lenders, including Reali.
- Government-backed loans. Government-backed loans like VA, FHA, and USDA are excellent options for borrowers who might not be able to purchase a home otherwise. These loans are also available through various financial institutions and can help borrowers with less-than-ideal credit scores and smaller down payments secure a loan.
Keep in mind that VA loans are only available to military members, veterans, and their spouses, while USDA loans are restricted to certain geographical locations.
Fixed vs. Adjustable Rates
Beyond just conventional or government-backed loans, mortgage loans can also be fixed-rate or adjustable-rate. Reali offers both fixed and adjustable-rate mortgages (ARMs). With fixed-rate, the loan’s interest rate remains the same for the entire loan term. Adjustable-rate loans, on the other hand, change at specific intervals.
There are also different mortgage terms available. Most home loans come in 15-year terms or 30-year terms, meaning that you need to pay back the loan over 15 or 30 years, respectively. However, there are also 10-year home loans, 20-year loans, 25-year loans, and 40-year loans available. Reali provides multiple term lengths.
Various mortgage term lengths have their pros and cons. Shorter term lengths like a 10-year or 15-year home loan have their benefits. These include shorter debt horizons, lower interest rates, lower total interest paid, and the ability to pay off principal faster, but they also have higher monthly payments and less repayment flexibility.
Higher term lengths like 30-year and 40-year mortgages, on the other hand, offer lower monthly payments, more flexibility in the speed of repayment, and the flexibility to invest your money elsewhere. However, they also have longer debt horizons, slower principal payoffs, higher interest rates, and higher total interest paid. It’s important to weigh the pros and cons of the term lengths before deciding which mortgage term length works best for you.
Get Your Documents Ready
Want to know how to get a loan for a house? Once you’ve decided which type of mortgage you want to apply for, you should gather all your documents. Doing so will ensure you have everything ready when you actually apply for the home loan. Here are the main documents you will need:
- Proof of income. Your mortgage lender will typically require you to show a few documents as proof of income. For example, you might need to show your two most recent pay stubs and W-2s, 1099 forms if you are self-employed, or at least a couple of years of tax forms. If you are receiving any child support or alimony, you will need to provide legal documents, such as child support decisions or divorce decrees, that prove you are currently receiving and will continue to receive these payments for at least another few years.
- Proof of assets and liabilities. Your mortgage lender will likely also require you to show proof of assets and liabilities. These documents can include your most recent investment or retirement account statement, proof of any gift funds deposited into your account, documents for any assets you sold before applying, and up to two months’ worth of account statements that show the assets in your bank accounts. If you have any debts, like a car loan or student debt, the mortgage lender will probably require that you show documents outlining these debts.
- Credit documentation. Your mortgage lender will also require that you give written or verbal permission for them to see your credit report as they will want to view your credit score, credit history, and any factors that might prevent you from receiving the loan, like a past foreclosure or bankruptcy. You will likely need to wait a few years before applying for a home loan if you have a foreclosure or bankruptcy on your report. We recommend explaining to your lender if you had any extreme circumstances that may have damaged your credit, For example, a healthcare emergency, with a copy of your hospital bills as proof.
Apply for Pre-Approval Online
As we move through the steps on how to get a loan for a house, it’s important to highlight the pre-approval process. But what exactly is pre-approval? Pre-approval is the process of figuring out how much money a mortgage lender is willing and able to give to you. When you apply for mortgage pre-approval with Reali, we consider your assets, credit, and income and use these factors to figure out your interest rate as well as how much money we can lend you for your mortgage.
The pre-approval process is beneficial because it tells you how much home you can afford and helps narrow your home search. Once you are pre-approved, you also become much more attractive to real estate agents and home sellers because they know you are pre-approved for a mortgage loan to actually purchase a home.
During the pre-approval process, Reali will ask you a few questions about the type of home you want to purchase, as well as your assets and income. You can also give Reali permission to view your credit report, which shows your past borrowing history from any creditors and lenders, including banks, credit unions, and credit card companies.
Apply for a Home Loan
Are you ready to apply for a home loan? One of Reali’s loan officers will work with you during our comprehensive online home loan application process, and our online dashboard will tell you where you are in the process. Simply apply online and find the right home loan interest rate for you. Reali offers a unique Rate Lock to provide you with a guaranteed interest rate. And you can sign all your documents online through our secure portal. Once Reali checks and verifies everything, we will fund your home loan.
Close on Your New Home!
After you receive your loan offer, you are finally ready to close on your new home. This is the part of the process where you pay the closing costs and receive your mortgage funds and the keys to your new home. While the closing process varies from state to state, you are typically responsible for paying the credit check fee, the underwriting fee, the appraisal fee, and the title services fee.
During the closing process, the closing agent will give a detailed statement about where the money originated and where it went. They will then enter the real estate transaction into the public record and give the home deed to you as the homebuyer.
Here are some of the most frequently asked questions and answers about mortgages:
- How much of a down payment do I need to purchase a home? You can typically receive a conventional mortgage loan with at least a 3% down payment and an FHA loan with at least a 3.5% down payment. If you qualify for a USDA or VA loan, you can receive a loan with no down payment at all. That being said, with a conventional or FHA loan, if your down payment is lower than 20%, you are required to pay private mortgage insurance, also known as PMI.
- Should I lock my interest rate? Reali offers a rate lock, which means that you are guaranteed today’s interest rate for about 30 to 60 days. We recommend locking in your interest rate, especially if interest rates are on the rise.
- What is a mortgage pre-qualification? A mortgage pre-qualification is a general review of your finances to determine if you qualify for a home loan. It differs from pre-approval in that the information you give is not verified and does not include any credit documentation, so it does not guarantee you a home loan. With a pre-approval, on the other hand, the lender will check your credit, verify your employment and income, and commit to giving you a specific amount of money.
- Can I Get a Mortgage if my credit is not perfect? As we previously discussed, it is possible to secure a loan even if you have less-than-ideal credit. Government-back loans are typically your best option.
If you are interested in learning more about how to get a mortgage, Reali can help! Feel free to contact us to learn more about the easiest way to get a home loan as well as tips on how to make the most of your real estate search.
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Finding a mortgage lender is easy, but finding one with awesome rates and no hidden fees is another story. We must be doing something right, because we made the list of Forbes Best Mortgage Lenders 2021.