One of the first steps to purchasing a home is starting the mortgage process. While it may feel overwhelming, it doesn’t need to be scary. Here are some steps to take to help ease the anxiety of securing a home loan for your purchase:
1. Know Your Score
While pulling your own credit report used to be taboo when applying for a loan, policymakers have made it easy to do so without it having any affect on your credit score. Websites like AnnualCreditReport.com and FreeCreditReport.com let you check your credit report without spending a dime.
2. Organize Your Documents
You will be required to submit official numbers and documentation for your mortgage application. It’s easiest to pull all these documents prior to starting the process. You’ll need your two most recent tax returns, two months of banks statements, last year’s W2s, and your last two pay stubs. You may also be asked for proof of investment assets (life insurance) and a gift letter (if you have family giving you money to buy).
3. Ask Your Agent for a Referral
Your agent has likely worked with a lot of lenders. They’ll know mortgage brokers who are reputable i.e. communicate well, stay on top of the process, work hard for their clients, and have solid loan options. Ask for a few names and choose the lender you feel most comfortable working with.
4. Discuss Loan Types and Terms
A mortgage is a huge commitment. Never, ever feel like you are asking too many questions. There will be more than one loan option, and you should understand all the terms, as well as the additional monthly costs that come with owning a home. Missing an important factor could make you house poor, meaning you can pay the mortgage but the rest of your lifestyle suffers due to low funds.
5. Get Pre-Approved
Pre-qualified means you give the lender the numbers they need to give you a ballpark idea of what you could afford. Pre-approved means you submit required documentation and get an official approval for a loan amount. Being pre-approved is much more solid than being pre-qualified and is an important part of the home search. It tells you what price range you should be looking in and tells sellers (when you submit it with an offer) that you are a trustworthy buyer. It can take a few days to be pre-approved, so it’s important to do this before viewing homes. Otherwise, you may miss out on submitting an offer on “the one”.
We know the home buying process can be confusing and anxiety ridden. That’s why we like to remind our clients that we are only an email or phone call away, and no question is too small.
The Mortgage Process Doesn’t Have to Be Scary
