What sort of things do you need to know about a mortgage application? Well, first and foremost, unless you’ve just robbed a bank (which we certainly don’t condone) or found a giant pile of money in a cave like the Count of Monte Cristo (which would be really cool), odds are that you’re going to need a mortgage in order to get your new house. That means that a mortgage application – the nuts and bolts that prove you’re worthy to the fine bankers of the world in order to get that mortgage – is an absolute necessity.
There’s no getting around the mortgage application! As charming as you may be, a nice smile and a firm handshake will not on their own entice a bank to sign off on the mortgage. So you’re going to have to go through the paperwork process. However … it’s okay! It really is! People have been going through the mortgage application process for a long, long time. It may seem like a hassle, but it’s really not as bad as it seems. Also, we’re here to help! Here’s our list of the six things to know about a mortgage application as you prepare to go through the process.
1) Start early.
Getting a house – and getting a mortgage – is a huge step in life. It’s not something that can or should be done on the fly. So, the best way to get the whole process started? Start thinking about your mortgage early. If you have a partner in the home buying process, sit down with them, and have a frank and honest talk about your priorities in the process. What sort of timeline are you looking at in terms of finding a house and getting your mortgage application in on time? What sort of resources could you count on to help out with the mortgage application process? Are there any deal-breakers in the process? What other significant life events – a job situation or drastic change in income, for example – could throw a wrench into all of your plans? The more honest and open you are about your expectations for the mortgage application and the mortgage process, the better your mindset will be when the real work starts.
This is particularly important for first-time home buyers going through the process. We’re going to do all we can to help here (hey, we’re writing a whole blog post about it), but your local network is also critical. Think of all the friends, family, and colleagues around you that have gone through the mortgage application process, and ask them if you can ping some thoughts off of them. Do they have any tips into the local market or local banking scene that can benefit you? Do they have contacts among lenders or banks that they would vouch for? How about any insider tips that could help along the way? Those kinds of first-hand notices are integral for the success of the process.
Ah, the dreaded credit report. We know that numbers don’t define us, but they can help or hurt us when it comes to getting a mortgage.
The credit report is – perhaps – the most essential part of the mortgage process. In essence, the credit report is a black-and-white look at how well you’ve performed when it comes to debts over the years. There are plenty of online resources out there to actually get your credit report, so choose one and see where your credit standing is (this should take place well in advance of the process). If it’s poor, the good news is that you’ll have some time to get it up to where it should be. Work to close any of the outstanding debts that might drag your credit score down and take the time to hunt down (and correct) any inaccuracies that might plague your credit score. Once you’re satisfied that your credit is in the best place possible, you can feel extremely confident heading into the next steps of the mortgage application process.
The down payment is the amount of money you’ll put down (see where it gets its name?!?) towards the entire price of the house at the very start of the process. So, the more money you put down at the beginning, the less you’ll owe towards the mortgage – and the more options you’ll have when it comes to repayment plans. Simple enough to understand, right?
So, as we said, it’s essential to have a realistic view of how much you’ll be able to put down at the start of the process. Sit down and take a close look at your finances – how much can you afford, and how much are you willing to put down? The old standard is “around 20 percent,” but these days, that might be quite unrealistic for many people (especially if it’s the first house) and there are many more available options.
It’s always a good idea, too, to start saving for that down payment much earlier. Try establishing a dedicated account with your bank to start saving up for the big purchase.
Don’t just stick to one or two banks, lenders, or brokers that are “in the area” when it comes time to finding these critical elements of the mortgage application process. Cast a wide net. This is too important of a decision to just go ahead, close your eyes, and pick the first choice that comes into your orbit. Take the time to do your research, and choose the ones that offer you the best rates – and the best relationship.
All of those important documents you have around the house? It’s time to start getting them ready for AWESOME DOCUMENT ACTION. Excited yet?!?
Okay, maybe it’s not that exciting. However – when it comes to the final stages of the mortgage application process, the last thing you want to do is run around the house unprepared, Home Alone style. So make sure you have every document that the Very Important Decision Makers will need for the mortgage application process. You’re going to need things like photo identification, tax and pay stubs, W2s, bank statements, and even some canceled rent checks from your last living situation in order to get things moving forward. Having all of these handy will make the mortgage application process go a lot smoother.
Well, we certainly hope that we’ve been able to shine some light on the mortgage application process! We swear, with a little bit of attention to the process and some quality engagement throughout, the good news is that the mortgage application process should be pretty painless. Oh, and if you’re searching for guidance in finding the best mortgage options out there? Please check out our dedicated mortgage division of LemonBrew here at LemonBrewLending.com.
One more thing: if you’re looking for information about anything involving real estate, we’re here to help, too! Check in on LemonBrew’s blog for some articles that might interest you – like “How to Save Money for a Down Payment” – or click here to find out how to match with a LemonBrew partner agent.