The mortgage process can be stressful … we know. Bank statements, credit scores, interest rates, loan estimates, closing disclosures, and more can really bog you down during the homebuying journey. That’s why we’re offering you a quick list of do’s and don’ts to help you cut through the noise and create a speedy mortgage process so you can focus on the fun stuff: finding your dream home!
Do: Get Pre-Approved Early
Don’t: Go House-Shopping Without Knowing What You Can Afford
When you get pre-approved for a mortgage loan early in the homebuying process, you identify exactly how much house you can afford. Plus, you can make a stronger, more competitive offer with a pre-approval letter—since a lender has already verified your income and assets to ensure that you can make the monthly payment.
Do: Work with Homebuying Professionals
Don’t: Think You Have to Go It Alone
Consider your homebuying professionals—such as loan officers, real estate agents, and home inspectors—as your coaches. Each has a unique skill set and experience that will help you reach your goal. You might even want to engage the help of a CPA, especially if you’re self-employed.
Do: Understand Your Credit
Don’t: Open or Close Credit Lines Without Consulting a Professional
It’s a good idea to understand your overall credit picture when you’re applying for a mortgage. Request a free copy of your credit report from each of the three major credit reporting bureaus. If you see something inaccurate, contact the credit agency to resolve the issue. Avoid opening new lines of credit, closing credit lines, co-signing on loans, or making major purchases with credit cards before or during the mortgage loan process. Whatever your finances, be sure to include all debts and liabilities on your mortgage application. Honesty is always the best policy!
Do: Keep the Lines of Communication Open
Don’t: Be Slow to Respond to Your Loan Team
You’ll hear from your loan officer throughout the mortgage process. You can keep things moving by providing any documents or information your loan officer requests ASAP. The key to getting a mortgage approved on time often comes down to the level of responsiveness from the borrower.
Do: Make a Savings Plan
Don’t: Make Major Purchases
Now is the time to focus on saving—not spending—your money. You may need funds available for things like an earnest money deposit, a down payment, or closing costs. Don’t make any large purchases—such as a new car, boat, or furniture—during this time, as these could impact your credit. Late payments can also be a red flag on a mortgage application, so make it a habit to pay your bills on time.
Do: Maintain Your Current Employment and Income
Don’t: Quit or Change Jobs
Applying for a mortgage is all about showing stability. The process goes more smoothly if you keep your job and income steady, while avoiding major changes like quitting your job. Don’t worry about getting a pay raise or a promotion, though—those are the exceptions to this rule! Amending your tax returns during the mortgage process can also trip up your application. If you do make a change, you may need a new loan approval.
Do: Maintain a Paper Trail
Don’t: Make Large Bank Deposits (Other Than Your Paycheck)
Mortgage lenders are required to document where your funds come from for earnest money deposits and down payments, even if you are using gift funds. Have a clear paper trail showing how money is coming in and out of your bank accounts, and where it’s coming from. Avoid making large cash deposits (or electronic transfers) into your personal banking account that can’t be accounted for. It’s also a good idea to keep personal and business funds in two different accounts if you’re self-employed.
Do: Keep Good Records
Don’t: Be Surprised if You’re Asked for More Documents
Mortgage lenders like to see documentation related to income, employment verification, and your current debts or obligations. This is where good records—such as W2s, tax return documents, pay stubs, and bank statements—come in handy.
Do: Ask Questions
Don’t: Panic! (Really, It’s Going To Be Fine)
Your loan officer wants you to feel knowledgeable and confident about the mortgage process. Ask as many questions as you’d like—and don’t panic! The mortgage process may seem confusing, but your loan officer is here to help you get to the finish line. Trust their expertise, keep the lines of communication open, and learn what you can about the loan process. You may find that it’s less difficult than you imagined.
How to Prepare for the Mortgage Process
Want to be fully prepared to meet with an APM Loan Advisor near you? Here’s a partial list of what you can gather in advance:
- Two months of most current asset statements for all accounts, including blank pages
- Two years of W2s
- Two years of federal tax returns with all schedules
- Recent pay stubs
- Most recent statements for retirement accounts (IRA, 401(k), etc.)
- Copy of driver’s license or other proof of identity
- YTD profit and loss (P&L) statement for self-employed borrowers
- Mortgage statement for all properties owned
- Homeowner’s insurance for all properties owned
It’s important to remember that the list of items requested by the lender will vary from person to person—and even transaction to transaction.
Your APM Loan Advisor will give you a detailed list of items needed right from the start so you can get them gathered. And if you work with APM, you can even manage your to-do list and scan and securely send your documents right from your phone!
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