If you are ready to apply for a mortgage, please click on either of the logos from our preferred mortgage providers to be taken directly to their application page. If you have questions about the mortgage process, please continue reading or call us directly. We’re here to help!
1. Why is getting a mortgage pre-approval so important?
- A pre-approval verifies to a realtor that the buyer has been properly vetted and has a strong likelihood of receiving a mortgage.
- Because a pre-approval letter is usually required in order to submit an offer, it is important to get this process started as soon as possible.
- Pre-approvals are typically very comprehensive in nature. A lender discusses income, credit, assets, liabilities, and loan programs. Credit report/credit score is pulled; income, assets, and additional documents will be collected and reviewed by the loan officer.
2. How do I get pre-approved?
- It begins with a simple phone call. Contact a recommended loan officer and they will conduct a short telephone interview.
- The lender will need to pull credit in order to make sure you have a qualifying credit score.
- Finally, the lender will request documents from you in order to verify all the information you have verbally provided them with. Once the lender has successfully reviewed these documents they can confidently issue a pre-approval.
3. What should I consider when selecting a loan officer?
- Lenders typically have similar rates and fees; the difference comes down to experience, competence, and customer service. Check with your real estate professional and ask them if they work with a preferred lender, and why.
- You may be working with a lender for a considerable period of time depending on how long it takes you to find the right home. Because of this fact, it is important that your loan officer is responsive, answers your questions clearly, and you have good rapport with them.
- Due to the ever-evolving laws and regulations that lenders must adhere to, it has become increasingly important that your lender has the experience and knowledge base of these guidelines, as well as all the loan products available to you.
4. What criteria do lenders consider when issuing a pre-approval?
- Credit Score: A borrower must have a satisfactory credit score to quality for a loan (different loans have different minimum credit scores)
- Debt-to-Income (DTI) ratio: Your total house payment + all long term debt as a percentage of your gross monthly income.
- Income: Stability, length of employment, style of compensation, and type of employment (i.e. self-employed, contract employee) are all considered.
- Available Funds: Do you have adequate liquid assets to cover the “cash” needed to close
- Additional factors: There are many factors that a loan officer must consider such as previous home ownership, divorce, bankruptcy/derogatory credit history, etc.
5. Who will I be working with once I apply for a mortgage?
- Loan Officer: Loan officers, or originators, are responsible for pre-approving you and matching your qualifications with the correct loan type and specifications.
- Processor: These individuals will help facilitate your loan. In addition to what has been collected during the pre-approval, processors will collect the necessary documents in order to submit your file to underwriting.
- Underwriting: While borrowers don’t have direct contact with underwriters, they are the individuals responsible for reviewing your loan application, making sure it meets all guidelines, and ultimately issuing the approval of your loan.
6. What are the costs of buying a house and getting a mortgage?
- Down payment: This amount will depend on the terms of your loan and purchase agreement.
- Closing costs: Fees charged by the lender, appraiser, title company, county & realtor.
- Pre-paids and Escrows: Typically a borrower will need to establish and adequately fund their escrow account
7. What funds are acceptable for closing?
- Funds in checking and savings accounts
- Funds from a 401k or retirement account
- Gift funds from a relative
- Proceeds from the sale of an existing property
- Cash deposits are not an acceptable source of funds for a closing unless the source is properly documented
8. Is there anything I should avoid doing after I apply for a mortgage?
- Do not apply for or take on any new debt/loans.
- Do not change jobs or style of compensation, if at all possible. This can complicate verifying employment and income.
- Do not make large deposits other than payroll (consult with your loan officer if necessary).
9. What if my credit score is low, I have had a bankruptcy, foreclosure, or a short sale?
- A competent loan officer should be able to assist you in repairing in your credit, as well as establishing an approximate timeframe to reach a qualifying credit score.
- Bankruptcy, foreclosure, and/or short sales do not automatically bar an individual from qualifying for a mortgage. Consult with a loan officer for specific waiting periods.
10. What are the most common hindrances to the mortgage approval process going smoothly?
- Following the financial crisis in 2008, the lending world received a massive overhaul. Lenders must follow many new laws and regulations, which require a loan officer to ask applicants for very specific documents. If a loan officer requests documents in a specific fashion, it will make your loan experience much smoother if you provide exactly they requested.
- It might be tempting to try and sugarcoat your financial past, especially if you’ve had a few bumps along the way. Be as upfront as possible with your loan officer. Sometimes what may seem like a small detail in your financial or personal history (such as a home deeded to you, alimony payments, etc.) can complicate the process if not disclosed in the beginning stages of the process.