I love living vicariously through our borrowers’ home searches. It’s like having my own real life HGTV. It’s always a unique journey and I see them ponder over and often change their “must haves” into “would be nice ifs.” They’re shopping, which is so fun, so sometimes it can be a bummer being the boring lender requesting a million documents all the time. Well, maybe not a million, but you get the idea. It’s not rocket science, it’s just shopping is way more fun than paperwork.
So, in an effort to make the paperwork part of the process less work, less stress, less unknown, and almost as fun as the shopping part, I’ve devised a checklist for anyone who wants to obtain a mortgage:
- Start with a lender. If you want to go to some open houses, or search for hours on Zillow, fine. But, understand, you really shouldn’t be shopping for a house until you know what you can afford. Yes, there are online mortgage calculators, but because so many of the details of your personal finances can only be truly proven through documentation, you’re going to need to get pre-approved with a lender. It’s easy to get a quote online, and you can have “like entities” pull your credit within a 30 day period to make sure you’ve found the lender with the rates, terms, and personality that meshes best with yours. That last part is pretty important, as, honestly, because of the Frank Dodd bill the vast majority of lenders have comparable rates, terms, and products. You really want to have a lender who can provide you with the service, communication, hard work, and honesty you deserve. There’s nothing worse than a lender who works bankers’ hours, especially when you’ve looked at 12 homes and it’s Saturday at 8pm and you MUST know that monthly payment before you write your offer. My advice, get a lender who is available to you and whom you trust implicitly. HINT HINT, APPLY HERE: ONLINE APPLICATION.
- Understand the application process. The four pillars of your mortgage loan approval are your credit score, assets, work history, and debt-to-income ratio. That means your application (link) will ask for the following items:
Full legal name
Date of birth
Social security number
Marital status and if you have any dependents
Current address, length of time at residence, and whether you own or rent
If less than 2 years, your previous address
Your current employer, length of time there, position held there, salary or hourly rate
If employeed less than 2 year, your previous employer
Any other income
Amount of cash available for closing costs and/or down payment
Ideal monthly mortgage payment and if you’d like to include taxes and insurance
Phone number and email address
Honesty and accuracy upfront will make for a smooth process in this step, which is called the “pre-qualification.”
The next step, the “pre-approval” is done through verification of that initial
information. So now it’s time to:
- Get your paperwork together. It may seem like you have to give your lender everything plus your blood type and your first born child, but we’re just complying with the regulations that have been set in place to prove that we have issued your loan approval through lawful evaluation. The government says we need these things, thus we ask them of you:
Last 2 pay stubs
Most recent 2 years’ W-2s
Most recent 2 years’ complete and signed federal tax returns (ALL PAGES and schedules)
Last month’s bank statements from any account you will be using for cash to close (ALL PAGES)
Clear copy of your driver’s license
Copy of your social security card
Contact number and address for all employers over the last 24 months
- Establish and agree upon your expectations. At Home Team Equity, we take pride in having the knowledge and system in place to streamline your mortgage process. We also truly care about our borrowers. We get it, this isn’t just an investment, this is your HOME. One of the ways we not only match but EXCEED our clients’ expectations is by communication. We do what we say we’re going to do. We answer your phone calls, texts, and emails. We are present and available for our clients. We keep you and the real estate professionals you are work with during the transaction updated on the progress of your loan so there are never any surprises. It’s a level of expectation that we believe everyone deserves when working with a mortgage lender. Once you’ve made an application with your lender, you will receive within three days of that application what’s called a Loan Estimate and that will show you your rate, monthly payment, and cash to close.
- From contract to closing. Under your real estate purchase contract, you are bound by deadlines in that contract and your trusted Realtor® will be such a valuable resource, working together behind the scenes as a liaison between you, the seller, their agent, the title company, the insurance company, home inspectors, appraisers, and even us, your lender. They ensure you are on task with those contract deadlines. What you can expect from Home Team Equity as your lender is for us to be in touch with you on a weekly basis to keep you informed of how the loan is progressing. The main thing you’ll need to keep in mind during this time is how vitally important it is for you to produce any extra documentation that are requested within 24 hours. That will ensure that your closing date can be met. It’s a tough job at times when much of the outcome depends on other people, but our guarantee to you is that you and your investment are protected. That is why we try to work with like-minded professionals who have the same sense of urgency when it comes to our clients. As a buyer, you also need to have the sense of urgency so that your deadlines are met and you are protected. We will be there each step of the way.
- Closing time! One of the most important things you’ll need for closing is money to cover the closing costs, which include things like courier fees, recording fees, title insurance premiums and underwriting fees. For this you must plan ahead, as most title companies accept only a wire transfer or a cashier’s or certified check. Personal checks will not be accepted. Your initial Loan Estimate that was given to you will have a basic outline of your fees. And, once you are locked into your loan rate, have the property address with exact real estate taxes, and doc stamps, and have secured your insurance and your survey, you’ll have your final numbers on what is called a Closing Disclosure. Ironically, the exact amount of the closing costs sometimes won’t be determined until the last minute, so be prepared to have the funds wired from your account or a check drawn up right before closing. GET YOUR PEN READY! THERE’S LOTS TO SIGN!
The reality is, the paperwork is not as fun as the house shopping, but in my experience with any area of life, if you know what you’re getting into, then you can walk confidently forward. And the good news is, with professionals you can trust, you won’t ever have to walk alone.