Are you a first time home-buyer? Has it been a while since you’ve purchased a home or refinanced? Don’t worry, we’re here to help! Our team is prepared to walk you through your loan step-by-step; however, borrowers have the best chance for a smooth transaction when they understand more about the mortgage process. Below are a few helpful tips to assist in your preparation.
TIPS FOR THE LOAN PROCESS
Consider Your Budget
Your loan officer will undoubtedly help you achieve a monthly payment that you are comfortable with, but you can think about this in advance. We all have our own definition of “affordable”. Consider all your monthly bills and decide approximately what amount you’d like your total mortgage payment to be. Just because you can qualify for a certain amount does not necessarily mean you are willing to pay that each month. Other factors such as taxes and insurance affect your monthly note and must be considered. You may also want to take into account furnishings, maintenance cost & cosmetic changes or repairs. The long term goal is for you to be happy with your monthly mortgage payment.
Not only do sellers prefer buyers who come pre-approved by a lender, which makes your offer more attractive, but a pre-approval also gives you confidence to shop accurately and efficiently. You can typically have an answer within the same day and be equipped with a vital instrument for an accepted contract.
Be Accurate In Your Loan Application
When your loan officer takes your application, it is very important to be accurate and forth coming. You are responsible for truthful representation. Each applicant is unique and specifics matter.
● Complete 2 year employment history listing ALL jobs with specific dates
● Recent life events such as divorce, relocation, bankruptcy, etc.
● Changes in income or specifics of overtime pay (exact timeframes & amounts)
● Don’t fudge numbers or hide information as this will only delay, or possibly even derail, your loan. Providing accurate information in the beginning ensures a smoother process and timely closing. Be honest, and your loan officer will gladly help navigate you through any potential obstacles.
Some general documentation is required for every borrower. On your first appointment with your loan officer, you will always need 1 month’s current paystubs, 2 month’s bank statements on all checking/savings accounts, and the last 2 year’s FILED tax returns and W-2s. Also, please bring a photo id and social security card. Additional documentation may be requested, but these items will certainly get the process started. We will be happy to make copies for you or assist where possible.
Be Prepared to Get Personal
Obtaining a mortgage may feel a little intrusive at times, but you are not alone. Lenders analyze every corner of your financial life in order to qualify you for a mortgage. You will be asked many questions that might feel financially invasive, but rest assured this is protocol, and no one is picking on you or your situation. We will do our best to keep this to a minimum, but be ready to be forthcoming with your loan officer, provide needed documentation and sign letters of explanation approved by you. Don’t feel anxious about the process. We are here to help, and we’ll work through it together!
Respond Promptly To Requests For Additional Information
During the loan process, additional documentation may be required by the underwriter. Information may include sourcing deposits, providing a copy of the cleared earnest money check, completing employment & residential history, etc. Please know in advance that this is completely normal, and respond as promptly as possible to these requests. The quicker you can get needed documentation to your loan officer or processor, the quicker your loan can be underwritten and cleared for closing. Your timely cooperation is very helpful in making the process go smoother and is greatly appreciated!
Leave Your Finances Alone
In the months leading up to your pre-approval try not to make major changes to your finances. This includes moving money from one account to another, making cash deposits, or receiving gift funds from a friend or family member for your down payment. Since lenders require extensive paper trails and funds to be sourced, it is best to speak with a loan officer before taking these actions. No question is a silly one and your loan officer will be glad you asked!
Pay Those Bills On Time
Your credit has a significant impact on your ability to qualify for, and what terms you receive, on a mortgage. To improve your credit, get current on your payments and stay current. Approximately 35% of your credit scores are based on whether or not you pay your bills on time; 30% of your credit scores are based on how much debt you owe. You might even want to consider paying down some of your debts. If you are unsure of your credit scores or what debts to pay off, your loan officer will be happy to discuss this subject in detail and guide you to make the right choices.
WHAT NOT TO DO after applying for a loan:
● DON’T provide earnest money in cash
● DON’T be late on any payments
● DON’T establish any new debt (credit cards or loans) or charge money to current cards
● DON’T make any major purchases (furniture, vehicle, appliances, etc.)
● DON’T make cash deposits that cannot be verified on paper. No “mattress money,” tips, or other unprovable funds. All money involved with the transaction has to be accounted for on paper. Payroll, tax returns, insurance claim checks are all acceptable. If you have questions, please ask before you deposit.
● DON’T quit your job, change jobs or make ANY changes that affect your income (even a promotion) without speaking to your loan officer first. Changes to employment or income can affect loan approval.
#1 THING TO DO after applying for a loan:
Contact your loan officer immediately should anything arise related to your employment, income, assets, financial obligations or major life events.
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