Your desire to buy a home is crystal clear — but the whole mortgage loan process is still a bit murky or mystifying. While different lenders will have their distinct requirements and steps, the basic flow from start to finish tends to be similar.

In this post, we'll cover:

• Residential mortgage fundamentals
• How to get a home loan
• Tips to make the process simpler and less stressful
• Benefits of getting your Oregon mortgage loan from a credit union

Home Loan Basics

What Is a Mortgage?

A mortgage (aka home loan) is a type of loan specifically designed for buying real estate. With a mortgage, the property being purchased is collateral for the lender.

There are different kinds of mortgages. The two most common are fixed-rate and adjustable-rate mortgages.

• With a fixed-rate mortgage, your interest rate will be the same for the duration of the loan. A steady mortgage rate can make your monthly payments more predictable.
• Adjustable-rate mortgages have interest rates that can change based on market conditions and events. This can lead to fluctuations in monthly payments.

Mortgages are a powerful financial tool and cornerstone of the housing market. They make it possible for people to purchase real estate — like homes — without having to pay the full asking price upfront.

Basically, your lender is financing your homebuying. You repay them (and gain equity) over time. This approach makes homeownership more accessible to more people.

Concepts & Terminology to Know

If this is your first foray into the realm of mortgages, you might notice there's a lot of lingo to learn. This quick primer is a good start.

• Your Credit Score, based on your credit history, is a numerical representation of your creditworthiness. Lenders use this information to determine how risky it is to lend you money.
• Pre-Approval is a process through which a lender reviews and assesses your financial profile to decide whether or not to give you a mortgage.
• Principal is the amount of money you borrow in your loan.
• Your Mortgage Rate is the percent of interest charged on your home loan. It determines how much interest you’ll pay over the lifespan of your mortgage.
• A Down Payment, usually a percentage of the total asking price, is an initial upfront payment made by a homebuyer towards the purchase of a property.
• Private Mortgage Insurance (PMI) protects a lender against loan defaults. Borrowers whose down payment is less than 20% of the home's purchase price may be required to get PMI.
• Closing Costs are expenses — like appraisal fees, title insurance, and legal fees — associated with finalizing a real estate transaction.
• Escrow is an account, held by a third party, where funds are kept to cover property taxes and homeowners insurance.
• Equity is the value of the homeowner's stake in their property. It's the difference between the current market value of the home and the remaining mortgage loan amount. 
• Repayment (Amortization) is both what you call the period during which you reimburse your lender for your mortgage and the actual process of making regular installments to pay your loan (principal and interest) off over time.

Credit Unions, Awesome Mortgage Lenders in Oregon 

Before we go into the loan process, let's take a moment to talk about mortgage lenders. Bluntly, they aren't all the same.

Picking the right loan officer and institution can be as important as selecting the loan that best fits your needs.

Generally speaking, working with a credit union may be a more favorable option than allying with a conventional bank or commercial mortgage lender. There are plenty of reasons for this, but they boil down to credit unions often:

• Have better mortgage rates
• Have more flexible terms and conditions
• Have a simpler, speedier application process
• Are invested in the welfare of their members and community
• Are more likely to work with a borrower to reach a sensible loan agreement
• Have much better service and support

Valley Credit Union is a leading mortgage lender in Oregon, serving Salem area residents for many years. We offer competitive mortgages and, according to members, top-notch customer assistance and financial tools and educational resources.

Mortgage Loan Process

The process of obtaining a mortgage involves a thorough assessment of a borrower's financial background and the value of the property for which the loan is being sought.

7 Steps to Securing a Home Loan

You’ll need to ask each lender you’re considering what its exact process is. However, expect the process you’ll take to follow this framework.

Step 1: You’ll Research Your Loan Options

When researching your mortgages, consider factors like interest rates, terms, and fees. Comparing offers from multiple mortgage lenders can help you find the best loan for your financial situation and homeownership goals.

You have access to a range of home loans via Valley Credit Union. We partner with Centennial Lending to give our members the best and broadest possible options. We invite you to check the daily mortgage rates and browse the FAQ knowledgebase.

Step 2: You’ll Apply for Pre-Approval

Pre-approval isn't a must — but is strongly encouraged.

When you're pre-approved, your lender will give you a letter detailing what kind of loan you qualify for and what your mortgage rate will be. This means you’ll know exactly what you can afford while you look at homes and consider options.

You can still get a mortgage without being pre-approved first. However, this proactive step arms you with more information for and control over your homebuying experience, which can save you valuable time and energy in a hot housing market.

VCU offers pre-approvals for mortgage loans as an optional first step. You can apply for pre-approval in person or online.

Step 3: You’ll Find Your Home & Complete Your Application

You've got your pre-approval for a mortgage in hand. What’s next?

It's time to settle on a final price range and find your future home. Using a loan calculator to figure out what your monthly payments will be is really helpful at this stage.

Once you’ve chosen a home that ticks all the lifestyle and budget boxes, it’s time to finish your loan application.

If you work with Valley Credit Union and Centennial Lending, you will receive a checklist of all remaining items and actions necessary to complete your application. 

Step 4: The Lender Will Process Your Application & Underwrite Your Loan

At this point, your loan still needs to go through underwriting (risk assessment) and processing before it can receive final approval. This step is faster and simpler if you’re pre-approved.

We stay in close contact with our loan applicants at this phase. This helps ensure your loan gets approved and is ready for an on-time closing.

Step 5: You’ll Close on Your Mortgage & Home Purchase

When your mortgage gets final approval, you're ready to close.

You'll set a closing date and location to sign the loan documents, agreeing to the terms of your mortgage. Your mortgage becomes final and the funds are distributed as soon as you endorse the contract.

Closing can be at your local credit union branch, title company, or home. If you aren’t able to be present for closing, it may be possible to arrange a remote closing or power of attorney.

Many homebuyers find it convenient to handle the closing of their home purchase at the same time as their mortgage. If you'd like to do this, you'll need to find a time and location that accommodates all parties involved.

Get your mortgage through VCU and your loan officer will coordinate with you, the real estate broker, and the seller to schedule a closing that works for everyone.

Step 6: You Become a Homeowner!

After closing, the seller will transfer the deed. You're officially the owner of the property and should get keys and all the other trappings that go along with your new home.

Step 7: You’ll Start Paying Down Your Mortgage

Almost immediately, you enter the loan repayment period. The exact date your first mortgage payment can vary but will be within 60 days of closing. However, mortgage payments are commonly due on the first of the month, with repayment beginning one full month after your closing date.

Contact us anytime if you have questions or concerns about your VCU/Centennial Lending mortgage.

Loan Process Timetable

Most pre-approvals are done very quickly. If you can provide all the asked-for information, some lenders — like VCU — can often complete your pre-approval in a matter of minutes.

Modern-day processing and underwriting of a mortgage doesn't typically take too long. Again, if everything's in order, you could have a decision on your loan application within a few hours or days. Pre-approval will minimize the time the lender needs to process your application and underwrite your loan.

Most sellers and buyers are eager to close and try to do so as soon as possible. That said, they also need to be realistic (and sometimes strategic). Because of this, it's common for closing to take a few days to about a month and is frequently a negotiating point for buyers and sellers.  

Valley Credit Union Advantage

At Valley Credit Union, our mortgage loan process is simple and straightforward. We, along with our incredible partners at Centennial Lending, will guide you through every step from beginning to end. You're never going it alone — we're always here to help you.

Success Tips to Make the Loan Process Faster & Easier

• Make an effort to learn about and understand the intricacies of how the housing market, mortgages, etc. work. This can help you navigate the complex world of real estate transactions with greater confidence and clarity.
• Check your credit report and score before you start house hunting. The better your credit score, the better your odds of qualifying for better loan terms. Looking at your scores in advance of your home search gives you some lead time in case you need to improve your credit record.
• Explore a variety of loans so you can see what's available to you and which options are most suitable for your circumstances. Shopping around for lenders and comparing rates may save you money and headaches in the long run.
• Communicate openly and honestly with your lender. Building trust can streamline the process and avoid misunderstandings. Be sure to ask questions and seek clarification when needed — it'll help you make informed decisions.
• Get pre-approved if possible. Knowing how much you’re pre-approved for can help you establish a manageable homebuying budget and speed up the purchasing process.
• Save for a down payment and closing costs. A larger down payment can often mean lower monthly payments.
• Stay organized and keep copies of all paperwork. Having your documents readily available saves time and reduces stress.

Valley Credit Union, Making Your Real Estate Dreams a Reality

Ready to take the first step towards buying your new home? Our goal is to make the mortgage loan process as fast, easy, and hassle-free as possible.

If you’re a Valley Credit Union member, you don’t even need to come into a branch to get pre-approved. All you need to do is apply online, and we’ll take care of the rest.

If you haven't yet joined VCU, but you’d like to (and take advantage of our competitive mortgages and other benefits), you can apply for membership now.

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.