A home loan is commonly referred to as a “mortgage”. But technically, a mortgage has a specific definition. There are mainly two types of home loans out there: a mortgage, which is an agreement between you and your lender, and a deed of trust, which involves an agreement between you, your lender, and a third party called a trustee. In California and a few other states, deeds of trust are the go-to option. Either is acceptable with the main differences occur if the house goes into foreclosure.
There are various types of mortgages available, including fixed-rate, adjustable-rate, FHA, and VA loans, among others. Each has its advantages and considerations, so it’s crucial to choose the one that best fits your financial situation and long-term goals.
After selecting a lender, you’ll need to complete a mortgage application. This will require detailed financial information, including income, assets, debts, and more. The lender will also perform a credit check.
Once your application is submitted, it enters the underwriting phase. During this time, the lender verifies your financial information and assesses the risk of lending to you. This process can take several weeks.
After your mortgage is approved, you’ll move to the closing phase. This involves signing a plethora of documents, paying closing costs, and finally, receiving the keys to your new home.
A loan secured by the property and used to purchase the property is considered a purchase loan or home acquisition debt. A purchase loan can be funded up to 90 days after closing on the property. See section “Home Loans/Mortgages” for more details.