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While buying a home is a huge decision that should entail a lot of planning and preparation, applying for a mortgage can be surprisingly easy. Just like with other lenders and creditors, a mortgage lender will want to know that letting you borrow money will be a safe investment. Applying for a mortgage is all about ensuring just that.

In today’s post, we’re going to breakdown the home loan application process to help you have the best chances at a smooth and successful mortgage approval. We’ll also define some of the common terms used in mortgages that might leave you scratching your head so you have a better idea of what your options are.

Prequalification and Preapproval

Getting prequalified and preapproved for a mortgaged can both be helpful steps toward securing your home loan. The two terms mean two entirely different things, however.

In order to be prequalified for a mortgage, you typically need to only fill out a simple form (sometimes directly through a lender’s website). On this form, you won’t need to provide specifics or official documents.

Why is this process so simple? Well, that’s because getting prequalified for a loan doesn’t ensure that you’ll actually receive one. Rather, it is simply the first step toward finding out what type of mortgage and interest rates you could receive.

The next step after prequalification is preapproval. To get preapproved, you’ll have to fill out an official mortgage application. Your lender of choice will request a few pieces of information from you, including tax returns, proof of employment for the last two years, and a list of your debts. The lender will also perform a credit check to determine your loan eligibility.

Credit report

At this phase, lenders will also run your credit report. This is a type of “hard credit inquiry” that details your payment history, the number of accounts you have open, and other factors that help make up your credit score.

To secure the lowest interest rate possible, it helps to have a high credit score. So, in the years and months leading up to your mortgage application, focusing on building credit will pay off.

To increase your credit score, you’ll need to focus on paying your bills on time each month. You should also avoid opening new accounts within a few months of applying for a mortgage because this will count as a new credit inquiry. New credit inquiries--including applying for a mortgage--lower your score temporarily, so it’s best to avoid them when possible.

Additional paperwork required for mortgage applications

Not every mortgage application will be the same. Depending on the type of income you receive, you may need to provide different forms of income verification.

Each person will also have to claim different debts and assets. When buying a home with a spouse or partner, it’s important to consider your debts, assets, and credit scores to determine if it’s better to apply jointly or separately.


Being a first time home buyer has it's benefits when it comes to financing. The Federal Housing Administration (FHA) has loans tailored specifically to you! Lower down payments and lower closing costs help newbies make the jump into home ownership. With a FHA first time home buyer loan you can get interest rates as low as 3.5%, which can really save money on the life of your loan and keep your monthly payments lower. Your down payment is also lower than a traditional mortgage; instead of putting 20% down, you can put as low as 3.5% down if you qualify. While a lower down payment will increase your monthly payment (since you are taking a loan out for more money), it will help with the burden of needing a large amount of money up front. With FHA loans you can also include most of the closing costs and fees into the loan, again helping with the money needed at the time of purchase. You can even add in the costs for repairing a home that needs a good deal of fixing up. Regardless, you will need to have enough money for the down payment, some closing costs, and inspection. Since you would be putting less than 20% down, FHA loans require that you also have private mortgage insurance (PMI), which is a percentage of your loan. This will be added to your monthly mortgage payment, and the bank will pay it out of your monthly. Being a first time home buyer probably means you need some help on getting through the process. The US Department of Housing and Urban Development (HUD) has housing counseling agencies that can give you advice on buying a home, avoiding foreclosure, and fixing your credit. You can find your local agency at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. Lastly, you can also find local buying programs to help with buying a home, including helping with your down payment at http://www.hud.gov/buying/localbuying.cfm. If you never thought you would be able to afford a house, think again. With programs out there to help you buy your first home, you could be moving into a place before you know it!



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