As a homebuyer, you probably have questions. We’re here to help you get answers to some of the top mortgage FAQs we hear from our customers:

1. When should you apply for a mortgage?

Preferably, as early as possible. It’s a good idea to contact your local Academy Loan Officer the moment you start thinking about buying. The mortgage process has become quite complex, and having a roadmap to help you navigate it will make buying a house much easier for you. Your Loan Officer will help identify your goals and find loan programs that meet your needs.

When you get a mortgage, you’ll also have your credit pulled. Having this done sooner allows time to correct inaccuracies and potentially work on issues that could save you money. With early guidance from your Loan Officer, you’ll have a much smoother homebuying experience that you can actually enjoy.

2. What do you need to do to get a mortgage?

When you prepare to get a mortgage, you’ll be asked to present several documents. These items help your Loan Officer determine if you’re qualified to take out a loan, how much you can be approved for, and what interest rate you qualify for.

These documents include:

• Credit history
• Bank statements from the last three months
• Pay stubs and proof of income
• W-2s and most recently completed tax returns
• A record of available assets
• Residence history for the past two years (including rental agreements and any owned real estate)

In some cases, additional documentation may be needed. For example, if you’re self-employed, your Loan Officer may request a year-to-date profit and loss (P&L) statement and balance sheet. You might also need a gift letter if you’re using gifted funds for your down payment.

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3. What does the loan process entail?

Qualifying for and using a home loan to purchase a house involves a relatively simple process:

• A homebuyer first gets pre-approved* for a specific loan amount.
• They then begin hunting for a house based on this pre-approved* loan amount.
• After finding the right house and negotiating an agreement with the seller, the homebuyer starts the formal loan application process. (Note that it’s also possible to get much of this loan approval taken care of in advance by using Academy’s Pre-Approval+, helping to expedite the closing process. You can read more about this here.)

During the approval process, a home appraisal and inspection are conducted to determine the value of the home and whether any issues are present. Just before the final loan approval, an underwriter reviews the borrower's entire loan application to determine whether the applicant qualifies for the mortgage. Once the underwriter gives their approval, the loan moves to closing and funding.

4. Which home loan should you choose?

You can use our loan decision tool to narrow down your options and help determine which loan is right for you. Each loan program has its drawbacks and advantages, and some may not suit your needs. For example, you’d only want to use a USDA Loan if you plan to live outside city limits and meet program requirements.

Even better: You can connect with your local Academy Loan Officer to find out which of our many mortgage programs can be customized to you.

5. How can you increase your chance of getting a better interest rate?

The two major contributing factors to your mortgage interest rate are your credit score and down payment. Regarding your credit score: The higher your score, the lower the rate. However, not all loan programs are equal when it comes to how your down payment will affect your rate. A large down payment may help reduce your rate substantially on a Conventional Loan, yet it may have little influence on your rate for an FHA Loan.

6. Do you need mortgage insurance?

Depending on the loan program, you may have to pay Private Mortgage Insurance (PMI) when putting down less than 20 percent. PMI serves to protect the lender in the case that a borrower is unable to keep up with mortgage payments. This insurance also allows a lender to approve applicants who may otherwise be considered a risk. You can read more about PMI—and when you might be eligible to cancel it—here.

7. How do you know when your loan is approved?

With an in-house team of processors, underwriters, and closers, your Academy Loan Officer will be able to keep tabs on your loan status at all times. They’ll use this information to frequently communicate with you. You’ll also receive dynamic videos throughout the loan process to further explain milestones, like: when your appraisal is ordered, when you’re clear to close, and, finally, when you officially own your house!