Are you shopping for a mortgage? Learn about the mortgage process from OneWest Bank.
For many homeowners, a mortgage symbolizes their most significant financial responsibility. But whether you’re in the market for your first home or you’re looking to refinance, understanding the mortgage process is crucial to making smart decisions about your financial future.
To get a better understanding, let’s take a deeper look at the process of obtaining a mortgage from OneWest Bank.
Once you've made the decision to get a home mortgage, you should first determine your budget and personal financial goals for a mortgage loan. Ask yourself: How much are you comfortably able to spend on your mortgage each month? What mortgage term works for you? There are many types of mortgage loans available to homeowners these days. Research products and rates along with loan options to determine what might work for you.
The Mortgage Process
If you are considering taking out a new mortgage to finance the purchase of a home or refinance an existing mortgage for more favorable terms, the first step in the process is to contact a Mortgage Lending Specialist to review available options. During this step we will gather some basic information about you to determine your eligibility for a home mortgage, such as your income, your desired loan amount, your asset information and whether there will be any co-borrowers on the loan.
After you’ve finished prequalifying and we have determined that you may be eligible for a mortgage, you’re ready to apply! Our Mortgage Lending Specialists will walk you through the application and you will be required to provide documents that validate your employment, income and assets (view documentation requirements). As soon as you’re done with the application and you’ve submitted your information, you’ll be able to lock in your mortgage interest rate while we start the underwriting process – a.k.a. the process of approving your mortgage. During this time, we’ll review your documents, complete an appraisal of the home you’re financing and underwrite the mortgage.
If your mortgage has been approved, we’ll arrange for you to close the mortgage by sending a notary to your home, office or any other convenient location of your preference. Then, all that’s left to do is sign the final paperwork and wait for the mortgage to fund.
Interest Rates and Discount Points
When you’re in the process researching interest rates, it’s important to remember that several things go into a mortgage lender’s rate. Mortgage rates are influenced by many factors, including the overall economy, debt market and the Federal Reserve Board’s monetary policy which change over time. As these factors fluctuate, so will mortgage rates. Keeping tabs on when mortgage interest rates are down is a good way to track the market and know when it may be a good time to consider refinancing or obtaining a new mortgage.
Discount points are another thing to keep in mind. Discount points offer you a chance to reduce your interest rate by paying an amount upfront. The cost of each point is equal to one percent of the loan amount -- for instance, for a $100,000 loan one discount point equals $1,000.
Whether or not paying discount points makes sense for you depends in part on how long you plan to keep the loan. To help you decide, use these steps when calculating your mortgage:
- Calculate the amount of your monthly payment at the interest rate you will be charged if you do not pay discount points.
- Calculate the amount of your monthly payment at the lower rate if you do pay discount points.
- Deduct the lower payment from the higher payment to find the amount saved each month.
- Divide the amount charged for points at closing by the monthly amount saved. The result is the number of months you must keep the loan to break-even on paying discount points.
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