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How Does a Mortgage Work?

The iServe Blog

How Does a Mortgage Work?

Sep 26
Category | The iServe Blog

When buying a home for the first time, many people don't understand the process. When it comes to getting a mortgage, that confusion is compounded as the number of forms, insurance, earnest money and other issues seem to expand. As a mortgage provider, we've heard many questions over the years about mortgages and how they work. Here's a quick summary to help get you started.

How does a mortgage work?

  1. Before starting your home-hunting process, get a few things in line. Look at your credit report and don't plan on doing a lot of borrowing until you've secured a mortgage for your home. Save money for your earnest money, closing costs and down payment.
  2. You can go through a preapproval process or start searching for a home. Many people prefer to be preapproved for a rough amount so they know how much home they can afford. This helps keep you from becoming attached to a home that is outside of your means and keeps your expectations realistic.
  3. Take a look at the type of mortgage programs for which you're eligible. If you can qualify for an FHA or VA loan, it may make the process much easier in terms of down payment and credit issues.
  4. Consider your budget and determine a rough idea of your payments. You'll want to keep your payments under 28 percent of your income, including principal, taxes, insurance and interest, as this is a rule of thumb for many lenders.
  5. Once you've found a home, it's time to start the mortgage application process. Work with a mortgage lender to see what mortgage programs you qualify for.
  6. You'll need some information to document certain facts, such as documents that verify income, proof of residence, bank and asset statements and any other information the lender may request. 
  7. Consider loan terms, length and type. Many loans are available in 15- to 30-year lengths and use a fixed interest rate or one that is adjusted, typically once a year.
  8. Once the lender determines that you qualify for the mortgage loan for which you applied, you'll be able to set up a closing and sign documents.

By knowing how the mortgage process generally works, you know what to expect and what information to keep handy during the process. Though the home buying process may be complicated, having a beautiful new home is well worth the effort. If you have any questions about the process, please feel free to contact a mortgage loan officer at iServe Residential Lending, LLC (NMLS # 2914) today. We're happy to help you find your way home.


Programs, terms and guidelines subject to change without notice. Not all applicants may qualify. All loans subject to underwriter and investor approval. Arizona Mortgage Banking License BK-0920658; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License  413-0646; Regulated by the Division of Real Estate Colorado Supervised Lender #988552; Georgia Residential Mortgage Licensee License #19613; Licensed by the New Jersey Department of Banking and Insurance License # 512567; Licensed Mortgage Banker—Licensed Mortgage Banker-New York State Department of Financial Services License # B501014; Licensed by the Virginia State Corporation Commission; Virginia Lender License #MC-3220, NMLS #2914 ( iServe Residential Lending, LLC, NMLS #2914-15015 Avenue of Science Suite 250, San Diego, CA 92128 Phone: (858) 486-4169