This guide is intended for Clients of Homes by Kathy Smith and may not be reproduced or distributed without permission.
2025 Homes by Kathy Smith. All rights reserved.
meet KATHY SMITH
PROFESSIONAL
Kathy Smith, Broker[in[ChargegandgOwnergofgHomesgbygKathy Smith, proudly serves Clients across the Greater Charlotte Area. With over 22gyearsgofgexperience in both North and South Carolina, Kathy brings deep market knowledge, strategic insight, and a highly personalized approach to every transaction.
Before launching her own brokerage, Kathy was a top producing Broker with Berkshire Hathaway HomeServices, earning numerous awards for performance and Client service. Her accolades include Circle of Excellence, President’s Club, Honor Society, and membership in the Leading Edge Society, placing her among the topg9gofgAgentsgnationwideK
Kathy holds several respected professional designations, including: Accredited Buyer’s Representative (ABR) Seniors Real Estate Specialist (SRES) At Home with Diversity certification (AHWD)
In 2025, Kathy launched a community centered initiative: bFreegDog withgEverygHomegSoldKcgThrough partnerships with local shelters, she supports responsible pet adoption, ensuring each new home can be
mortgage breakdown
Q. what's a Mortgage?
A. In simple terms, a Mortgage is a type of loan that you can use to buy a home if you're unable to pay the house in cash upfront or simply prefer to finance the purchase price.
Q. how does the Mortgage process work?
A. This is what this Guide is all about! As you read through the pages, you will gain a general overview of how the Mortgage process works, what types of steps are involved, and what you need to begin your qualification!
Q. can anyone get a Mortgage?
A. Mortgage qualifications widely vary upon your financial situation, the laws in place, the Lender you choose, and the area you live in. Most people can qualify for a Mortgage in their lifetime but may not be ready when they would like to be.
LOAN PRINCIPAL
WHAT IS INCLUDED in a mortgage payment?
The principal amount is the amount you have borrowed (excluding interest).
LOAN INTEREST
The interest on a loan is the amount a Lender charges you for lending you their money.
PROPERTY TAXES
Property taxes are annual fees owed to your local municipality, which most people like to pay off monthly.
MORTGAGE INSURANCE
Mortgage insurance may be required by your Lender if your down payment is lower than 20% of the purchase price, or if they want to lower their risk of lending you a large amount of money that you might otherwise not receive.
Therefore, don't be disappointed if you don't qualify right away, as things can always change quickly - stay optimistic!
01mortgage processSTEP 1:
ONE. FIND THE RIGHT PROFESSIONAL
Before you start shopping around for Mortgages, find a professional you trust to guide you through the mortgage process. Many like to find a local Mortgage Broker, as they work to find homeowners the best Mortgage deal by comparing offers from different lending sources. However, you can also work with someone in a specific financial institution, such as at a bank, to help you as well. If you need Lender or Mortgage Broker recommendations, let me know, so I can put you in contact with some professionals I trust!
TWO. GET A MORTGAGE PRE-APPROVAL
Once you submit your application, supporting documents and credit reports, your professional will review your financial situation and evaluate your ability to afford a Mortgage payment, considering extra home ownership fees, such as property taxes and insurance. If the Lender believes you are ready to qualify for a Mortgage, they will let you know how much they would be willing to give you.
THREE. HOME SHOPPING & MAKING AN OFFER
Having a Mortgage pre-approval done will help you establish the price range of homes you want to look at and up to which price you would be comfortable making an Offer once the time comes. Once you find your ideal home that meets your wants and needs, it's time to act fast and make an Offer! Depending on your circumstances, contingencies will be added to the contract to get inspections and an appraisal done to comply with the Lender's requests.
FOUR. FINALIZING THE MORTGAGE LOAN
After an Offer is accepted, a Lender may have the property appraised to ensure that the home you are buying is worth the amount you offered. In other words, they will hire an Appraiser to view the home and determine its current market value. If the Appraiser determines the home is worth less than what you agreed to pay, the Lender may reject financing or you may have to contribute more money and pay the difference.
FIVE. CLOSING DAY
Closing day finalizes two processes: the home buying process AND the mortgage process. You will have many documents to sign, with some directly associated with the Mortgage. Then, you will retrieve the keys to your new property. CONGRATULATIONS ON YOUR NEW HOME!
02mortgage qualificationSTEP 2:
Now that you have an idea of how the mortgage process works, it's important to understand the main factors that determine whether or not you qualify for such a loan. In today's market, Mortgage qualification is typically based on four factors: your annual income, your down payment, your assets and liabilities, and your credit report.
ANNUAL INCOME
Usually, Lenders will qualify those who have shown consistent income for the past two years (minimum). If you're buying a house jointly with your spouse or another individual, Lenders will consider the combined annual gross income. Furthermore, if you are self-employed or receive a commission-based salary, you can still qualify for a Mortgage. However, Lenders may request to see at least an extra year of past annual income in these cases.
DOWN PAYMENT
When considering you as a candidate for a home loan, lenders will take into account the size of your down payment. The more you can put down, the less you will have to borrow, and the Lender will see your financial commitment as less of a "risk".
When reviewing your financial documents attached to your application, Lenders will measure your financial situation and ability to pay your Mortgage by calculating your Debt to Income Ratio (DTI). This ratio informs Lenders of the proportion between the money you earn versus the cash you need to spend to pay off debt.
Depending on the loan program you qualify for, there will be a ceiling for the amount of your income which can be used towards your monthly Mortgage payments. It could be as low as 28% or as high as 36%. The lower these ratios, the easier it is for you to qualify for a Mortgage.
ASSETS AND LIABILITIES CREDIT REPORT
As applying for a Mortgage typically means you are asking to borrow a lot of money, Lenders want to make sure you are responsible with your money and pay back what you owe (and on time). One way to measure this ability of yours is to analyze your credit history. Therefore, having a clean credit history will help you qualify for a Mortgage. However, having no credit history or a poor record could affect your qualification.
03types of financingSTEP 3:
CONVENTIONAL LOAN
A conventional loan is a type of Mortgage that is not affiliated with any governmental entity but instead available through private financial institutions, including banks, credit unions, and Mortgage companies. This implies that it may be more challenging to secure such a loan. This type of Mortgage typically has a fixed-rate interest, meaning that the interest will remain constant throughout the loan's lifespan.
ADJUSTABLE-RATE MORTGAGE (ARM)
There are different Adjustable-Rate Mortgages available in today's market. However, the main idea remains the same throughout all these options: the interest rate varies throughout the loan's lifespan, reflecting on economic changes and the cost of borrowing money. ARMs are also called variable-rate Mortgages or floating Mortgages.
This type of loan gives Homebuyers the option to pay off only the interest portion of their Mortgage (which takes around 5 to 10 years before paying off the principal amount in full like in a conventional Mortgage.
04associated costs STEP 4:
When buying a home, you will have to consider many possible costs associated with your purchase. These are some of the principal costs you should consider before buying a home:
Earnest Money is, in simple terms, a deposit made by the Buyer once a Seller accepts their Offer. This deposit, also known as a good faith deposit, is a way to represent the Buyer's seriousness of buying the home a going through with the home purchase transaction.
The deposit is typically 1-2% of the final purchase price and counts towards your down payment. The amount varies, as it is a item which can be negotiated in the Offer process. When planning a strategy for your Offer's writing, we can discuss offering a higher earnest money deposit if it is within your means to increase your Offer's appeal to the Seller.
The Due Diligence Fee is paid directly to the Seller at the time of Offer acceptance and is also applied to the purchase of the property (in North Carolina). But if you decide to not proceed with the purchase, this money is forfeited. In South Carolina, it is called an Early Termination Fee and paid at the time of being released from Contract.
When purchasing a home, you will need a sum of money to put down as a down payment for your new home. Most down payments are between 5% to 20% of the purchase price, but this can vary based on your scenario. Furthermore, some assistance programs may be available through the government.
We recommend that you seek personalized advice from your loan representative.
CLOSING COSTS
DOWN PAYMENT
On closing day, you will have to pay off many fees (beyond the down payment) before receiving the keys to your new home. Although everyone's situation is different, some expenses you may have to cover include Attorney fees, property taxes, insurance, Appraisal fees, and more.
As a rule of thumb, aim to save up at least 2% to 3% of the property's purchase price to cover these costs.
05terminology to know STEP 5: AMORTIZATION
The schedule of your equal mortgage payments spread out over a certain period. Usually, a Buyer's amortization schedule consists of one or two monthly payments lasting a 15- to 30-year period.
APR
The Annual Percentage Rate (or APR) is the amount of interest your Lender charges you on your loan every year.
ESCROW
Escrow is a part of the home buying process. It refers to hiring a third party to handle the transaction, exchanging money, and any other related documents. To use escrow means for the Buyer to deposit their money in an escrow account held by a third party (usually my Brokerage) after an Offer has been accepted (the funds are released to the Seller when the transaction is complete). This process helps assure Sellers that the Buyer has funds, so they will be able to close. There are many documents to sign and complete and instructions to follow during this process.
APPRAISAL
An Appraisal of your home is typically done by a professional Appraiser who comes up with an unbiased estimate of your property's value. An Appraisal is generally done so that Lenders are sure they are lending Buyers the right amount of money. The Appraiser will determine the property's value based on viewing the property in-person and the sale price of comparable homes in the area. If the appraised property value is lower than what the Buyer has offered, the Lender may require the Buyer to pay the difference in cost.
HOME INSPECTION
A home inspection is done by a professional Home Inspector and is a common contingency to include in an Offer by the Buyer. Its goal is to establish the property's condition and make sure its features are up to code (including plumbing, appliances, foundation, electrical, etc.). If the Home Inspector finds any issues, the Buyer may choose to negotiate the home's final sale price or ask the Seller to fix the problems before closing day.
DEED
A Deed is a written legal document stating that the Buyer is now the property's official homeowner. The Deed transfers home ownership from the Seller to the Buyer and is sometimes referred to simply as a "transfer."
06
what next?STEP 6:
Now that you have looked over the information I have provided in the Guide, it's time for you to create a financial plan and start gathering all the necessary documentation to get ready for the first step of the mortgage processfinding a local Lender professional to work with you.
To prepare for this first step, I suggest closely managing your finances (even if this isn't a regular practice for you). This means starting to create a periodic budget to help you keep track of your income and expenses. This will not only help you get on a healthy financial track to save for all the expenses you will have to incur during the home buying process but also making yourself aware of how much you can comfortably afford to spend on a Mortgage.
As for the documentation you will have to present, you can begin gathering and saving them before making an appointment with your representative. Some standard documents buyers typically need to represent include:
A few pay stubs from recent weeks/months
Tax filings from the past 2 years
Bank account statements from recent months
Now that you know the basics, once this is all prepared, you will feel ready and confident to move forward with the mortgage and home buying processes!
