Housing Trends

First Time Home Buyer Step 5... Apply for the Mortgage

Step 5: Apply for a mortgage. 


Once you have a signed contract on a home, it’s time to apply for a mortgage. Remember that you still must formally apply for a mortgage even if you have already been pre-approved. Also remember that you are not obligated to apply for a loan with the same lender who originally provided you with the pre-approval . 

Meet with a Lender. Your lender will then guide you step by step through the entire application process. 
Your lender will discuss mortgage terms and rates. 
Your lender will explain "PITI." Your lender will explain the components of a monthly mortgage payment known as “PITI.” PITI stands for “principal, interest, taxes and insurance” and represents the monthly loan service of principal and interest, as well as the monthly property tax payment, homeowners insurance premium, and mortgage insurance premium, if required, (as well as any other insurance premiums) that combine to form your monthly mortgage payment. 

Your lender will provide a “good faith estimate” of closing costs. Federal law requires your lender to provide you with a “good faith estimate” of closing costs within three days of applying for a loan. Closing costs can range from between 3% to 5% of the sale price of the home. Closing costs include fees associated with the services provided during the processing of your mortgage application. Some of these fees cover the costs of the credit report, the title search, the title insurance, the lender's attorney, the buyer’s attorney, the home appraisal, the property survey, the document recording and the transfer taxes. Closing costs also include escrow accounts. Knowing what your closing costs will be in advance helps you to plan your budget for the loan closing, which is when you will be required to pay them.

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