Tips For Applying For A Mortgage

Ways that make preparing for mortgage agreement easier!

Getting everything in order to apply for a mortgage loan can be the most overwhelming part of the home-buying process, but it doesn’t have to be! The majority of homeowners do end up with one, so having a mortgage can be a painless process when thoroughly prepared for.

Getting Prepared

It is important to go into the process as organized as possible, like making sure a buyer is confident in their credit score (recommended to have a 700 or higher but a 640 is perfect for certain loans), researching comparable lenders and types of loans, and finally, getting pre-approved. The whole mortgage process averages 45 days for buyers who begin with their paperwork in order.

Pre-Approval Paperwork

In order to go through with getting pre-approved for a loan, the necessary documents must be submitted accordingly. Regardless of income, the most recent two years of federal and state tax returns may be required, but are in the buyer’s best interest to have available anyway. (60 days of) Bank statements, brokerage accounts, or other types of assets can be submitted to qualify for a loan. On hand, a buyer should also keep the most recent two months of their IRA or 401(k) statements for submission. Review monthly debt expenses and inform an agent or lawyer of any divorce, bankruptcy, or foreclosure from recent years that could cause hiccups in the approval process. This will help a buyer’s representative keep the transaction as smooth as possible. After submitting all documents for pre-approval, and choosing the best lender, it is finally time to contact them and get it processed.

Working With A Mortgage Lender

Now that a lender is involved, they are going to request a fee to cover a credit report (avg. $25) and the appraisal (avg. $400). They will likely review pay stubs and tax returns again, similarly to the pre-approval stage of the process. Once the appraisal and loan processing are complete, an Underwriter will assess the risk in lending a home-buyer the money they need. They will judge a buyer’s ability to pay bills on time, their credit character, and if they have the liquid cash flow necessary to continue. Things like if the home was valued appropriately or the location the property sits on are also taken into consideration. Hopefully, the buyer will soon get a notice from the lender where they confirm that they are cleared for the loan. Three business days before the home is scheduled to close, the lender will send a Closing Disclosure that records the final costs of the mortgage. This is where the buyer can confirm all costs and complete the process of buying a property. All that is left is a load of paperwork!