The home buying process can be a complicated and scary thing to deal with, and this is especially true if it is your first time navigating these choppy waters. People don’t usually like being thrown into something that they are unsure of, and it doesn’t help ease their stress or worry either.
So, to help you as a potential homebuyer on the hunt for their dream home, we are here today to go through the mortgage process with you and hopefully help relieve some of the uncertainty and frustration you may be enduring.
Mortgage Pre-Approval
If you want a much smoother home buying process, then it is always a good idea to get a loan pre-approval to start you out on the right foot. You don’t want to find your dream home, fill out the paperwork, and then find out you don’t qualify. So, to alleviate some of the heartaches, pre-approval is one of the best approaches to take.
Your credit report is pulled to show your credit score and credit history. The potential lenders can also take a look at your payment history and your past lines of credit. All of this information will help the lender decide just how much you are qualified to borrow for your new home.
Mortgage Pre-Qualification
This is not the same as a pre-approval, even though many people mistakenly believe they are the same thing. Pre-qualification is a less meaningful measure of your ability to repay a loan. It is more of a quick glance into your credit and payment history rather than a more in-depth view like you would find with a pre-approval.
There is no third-party verification of the answers you give to the lender’s questions, and there is no proof for the lender that you would really be able to pay back the loan.
House Shopping
Once you obtain your pre-approval, you will find that house shopping is going to be a much more enjoyable experience because you are going into it knowing what you can afford.
When looking at homes in your price range, make sure you are given the most accurate pricing, up-to-date information, and all the other information you need to make a more informed decision.
Apply for a Mortgage
Once you find the home you want, you will make an offer and apply for a mortgage. To make the underwriting process go more smoothly, there are several documents and other info you will need to have handy.
- Employer Information. Make sure to have the name and address of your current employer, the length of time you have worked there, your position and title, and what your annual salary is including any overtime, bonuses, or commission you receive.
- Income. Have at least two years of W2s, a profit, and loss statement if you are self-employed, pension or social security information, public assistance income, child support, and alimony.
- Assets. Have all your bank account statements handy including any savings, checking, or brokerage accounts you have, real property, investments, proceeds from the sale of your current home, or any down payment assistance you are receiving.
- Debts. You also need to verify all debts you have, including a current mortgage, liens, car loans, and credit cards, for example.
- Blemishes. You will also need to be prepared to explain any issues you may have had in the past with your financial background. It is recommended to have dates and amounts for any missteps like a bankruptcy, foreclosure, or collection account.
Once all these documents have been looked at, the lender will decide if you qualify to purchase the home. Closing is the time you have been looking forward to because this is what will ultimately seal the deal.
While it seems like a drawn-out and complicated process, obtaining a mortgage is easy and straightforward as long as you know what to expect, you follow all the steps, and you have all the documents you need.
