When you’re ready to get a home loan, it can help to have as much information about the mortgage process as possible. That way you can take the right steps towards getting your loan, and hopefully avoid some of the more common pitfalls along the way. To help you reach your goal of homeownership, here’s a list of dos and don’ts as you start with the process of getting a home loan and buying a home.
When you get preapproved for a home loan, you can find out exactly how much house you can afford. This means hopefully you’ll avoid falling in love with a home outside of your price range when you start looking. And there are more benefits to getting a preapproval before shopping for a home; when you find the right one, you can make a stronger, more competitive offer with a preapproval letter since a lender has already verified your income and assets.
Consider the home buying professionals, such as the loan officers, real estate agents, home inspectors, and other professionals who will work with you during the home loan process, as your coaches. Each professional has their own unique skill set and experience, and together they all want to help you reach your end goal. You don’t need to be a mortgage loan advisor yourself when you have one of APM's mortgage professionals by your side.
Before you begin the mortgage process, it’s a good idea to have an understanding of your overall credit picture. If you don’t know where you stand, you can request a free copy of your credit report from each of three major credit reporting bureaus. If you see something on your report that is inaccurate, don’t ignore it. Contact the credit agency to resolve the issue. Avoid opening new lines of credit, closing credit lines, co-signing on loans, or making major purchases with credit before or during the loan process.
Expect to hear often from your team of professionals throughout the home loan process. Your mortgage advisor will keep you up-to-date throughout the entire process, and provide clear communication every step of the way. If your mortgage advisor asks you for additional documentation, be sure to provide it as soon as possible. Often times, the key to closing your loan on time is promptly providing your loan advisor with the documents a lender requests.
Think of this time as a time to focus on saving, not spending, your money. You may need funds available for things such as an earnest money deposit, a down payment, or closing costs. Don’t make any large purchases, such as a new car, boat, or furniture during this time -- as these could affect your credit. A focus on saving, not spending, can help you avoid some of the mistakes more commonly seen during the process of getting a home loan.
Think “stability” immediately before and during the loan process. By keeping your job and income steady, and avoiding major changes such as quitting your job, you can help the process go smoother. If you do make a change, it could result in you needing a new loan approval, or even a denial. Don’t worry about getting a pay raise or a promotion, however; that’s the exception to this rule.
Mortgage lenders are required to document where your funds come from for earnest money deposits and downpayments, even if you are using gift funds. Be sure to have a clear paper trail showing how money is coming in and out of your accounts, and where it’s coming from. Avoid making large cash deposits (or electronic transfers) into your personal banking account that can’t be accounted for.
Mortgage lenders like to see documentation for things such as income, employment verification, and your current debts or obligations. You can help the process move along smoothly if you have good records to provide, such as W2s, tax return documents, paystubs, or bank statements. And if your mortgage advisor asks for additional documentation during the process, don’t be surprised. It may be something the underwriter needs to help you close your loan.
Your mortgage advisor wants you to be feel knowledgeable and confident about the mortgage process. Ask as many questions as you’d like until you understand it. And don’t panic! The loan process may seem confusing, or even scary, but your advisor is here to help you get to the finish line. If you trust in their expertise, keep the lines of communication open, and learn what you can about the loan process, you may even find that it’s less complicated than you ever imagined.
Want to be fully prepared to meet with an American Pacific Mortgage advisor near you, here is a partial list of what you can gather in advance before meeting with your mortgage advisor:
Here are some of the documents you may be asked for when you want to get a loan: