6 Ways to Make Your Mortgage Application Easier
Applying for a mortgage is a huge step in the homebuying process. After you’ve taken the steps to improve your credit, save for a down payment and even start shopping for homes, the most daunting step can be actually applying for the mortgage.
Because mortgages are the most expensive loan you’ll take out in your life, there are a bevy of regulations, loan terms, fees, steps and signatures required before you can close and start moving in. However, it doesn’t have to be as complicated as you believe it to be.
6 things you can do to keep the mortgage process simple
The first time you apply for a mortgage pre-approval, do it at a credit union or a bank with a mortgage specialist
Shopping for a mortgage lender is just as important as shopping for a house. You want to go with a lender that has mortgage specialists on standby who can hold your hand through the process and walk you through it step-by-step. If you head to your local credit union or bank, you should be able to sit down with a mortgage specialist who will answer all your questions with personalized service. At this point, you can also apply for pre-approval with the credit union or bank.
[ Read: Best Mortgage Rates ]
Even if you decide not to go with that initial mortgage offer, simply going through the process with a mortgage specialist that listens to you and answers your questions makes the process of applying for a mortgage for the first time much easier.
Ask plenty of questions
If you’re meeting with a mortgage specialist and they start talking about something that you do not fully understand, don’t hesitate for an instant to stop them and ask what they mean or what that specific term means. That mortgage specialist will be able to explain it in simple terms for you so that you can easily add it to your body of knowledge.
You absolutely do not have to go in the door knowing everything, nor should you be expected to. The one thing you need more than anything when meeting with a mortgage specialist is a willingness to ask questions and not feel foolish. There is no such thing as a stupid question in situations like this and asking a “stupid” question will not affect your mortgage in any way.
Thankfully, many good mortgage specialists understand that first time home buyers are going to come in the door without a lot of knowledge about mortgages, and they’re trained to explain everything clearly right off the bat. That’s a big reason why it’s a good idea to start off with a financial institution with a good mortgage specialist.
Don’t stress out about the amount of paperwork
Many books and other guides about applying for a mortgage call up this giant list of documents that a mortgage lender will want to see during the mortgage process, and that list is intimidating.
The truth is that such lists are nice to have in a home buying book for reference, but you will actually only be responsible for acquiring a small portion of those documents. Most of them will be acquired directly by the lender, and of the ones that are not, the lender will explain exactly how to get them.
[ Related: 17 Things to Know Before Buying Your First Home ]
So, why do mortgage lenders need so much stuff, anyway? The simple answer is legal requirements. Lenders are legally required to document every element of their reasoning for why they chose to offer you a mortgage or not and for how much. That information must be in writing so that it can be referred to in case the lender is accused of improper lending practices.
Gather basic documents before applying
There are some things that you know that a lender will want, so you might as well prepare them beforehand. Here are some documents you should have on hand before you even start meeting with a mortgage specialist:
- Clear proof of identity, such as a driver’s license or, even better, a passport.
- Copies of your recent tax returns — the last three years are a good starting point.
- Recent pay stubs from your employers, which proves your current employment and current rate of pay. Bring copies of the last three stubs.
- Recent statements from your bank accounts, showing how much you have in those accounts. Bring copies of the last three statements.
- Recent statements from your retirement accounts, showing how much you have saved for retirement. Bring copies of your last three statements.
Having those documents in hand right off the bat will keep them off of the to-do list that the mortgage specialist will give you after your initial meetings.
Keep your own record of what documents you provided to the lender
Just as lenders will document exactly what documents you provided during the application process, you should also record and keep track of the same information.
The easiest way to do this is to keep a record for yourself of what documents you provided to the lender, where you got them from, when you delivered them and to whom you delivered them. Ideally, you’ll retain copies of many of the documents for your own records.
[ Read: How to Get a Preapproved Mortgage ]
One good way to do this is to get electronic copies of many of the documents you pick up during this process (remember the to-do list that your lender will give you). Keep an electronic copy for yourself, then send a copy by email to the lender. Don’t do this if the document contains specific sensitive information about you personally, such as your Social Security number, but many of the documents won’t include that type of information. If you do this, then the email serves as both a record of the documents you sent as well as proof that you sent them.
Don’t lie about your financial history
You may have a strong desire to avoid mentioning or even to cover up things in your recent financial or employment history that might mark you as a less-than-optimal candidate for a home loan.
Here’s the truth: the lending institution is extremely likely to find those things out anyway and being upfront about them gives you an opportunity to put a positive face on them and tell your side of the story. This is particularly important if you are meeting with a financial institution that does manual underwriting, meaning that an actual person looks at your financial and professional situation to determine what mortgage offer you’re eligible for.
Almost all of us have blemishes in our credit history and our employment history. Trying to hide them does you no favors because those blemishes will likely be discovered when they pull your credit report or look into your employment history. You are far better off being upfront about them.
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Last updated August 10, 2020 – Updated advice to reflect the mortgage landscape in 2020.
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