HOW TO APPLY FOR A HOME MORTGAGE In my 14 plus years in the home mortgage business I've seen a lot of applications for mortgages. While it is always great to work with someone seeking a mortgage, when the borrower is organized and somewhat prepared it is even more rewarding.
Here a few tips to assist a borrower who wants to get ready to apply for a mortgage; some of the first questions I ask a potential borrower.
1) Have you been employed at least two years? If you are self employed, have you filed at least two years to tax returns as self employed?
2) How much do you plan on putting down if you are purchasing a home? If you are looking to refinance, do you know about how much equity you have in the property?
3) Do you have your current bank checking and savings and retirement statements? Whether you get these by mail or online, be sure and have all the pages. The statement will usually read page 1 of ___. When I see that I know how many pages there should be, even if they are blank.
4) Do you know what your credit looks like? Have you seen a copy of your credit recently? If the borrower is well established and always pays bills on time, then I would expect no issues on the credit. If a borrower is unsure, I sometimes tell them to go to www.annualcreditreport.com and get a copy of their credit from at least one of the three reporters of credit. It is free (say NO to the chance to buy your score) and will be very helpful in case there is anything on there that is unexpected.
The free copy works especially well if there are any issues because if a borrower gets a copy of their credit here, it does not count as a "ding" on their credit score. Sometimes this copy can serve as a road map to do some damage repair before actually applying for a mortgage.
5) Do not get your credit pulled multiple times. If you are serious about applying for mortgage, do not apply for credit cards, car loans, or any other new debt. Take care of the housing needs first. A new car loan can bump a borrower out of qualifying for a home loan for instance.
6) Have your tax returns and W-2's handy. It is a good idea to have the loan originator review these documents before you get too far into a transaction and spend money that cannot be recouped. For instance if you write off losses for business or real estate it may make your tax obligation less, but it also takes away from the money you can use to qualify for a home mortgage. When it comes to housing, your income is what you pay taxes on.
7) Know what you want to spend. Write down your goals. Often a mortgage transaction is not about the maximum one can have, but about what works in conjunction with other debt obligations.
8) Last, but not least get pre qualified before shopping for a loan. Many a buyer has written a contract only to find out they are unable to close or have to jump through hoops to do so. If the home work is done up front, it will be way more pleasant for all parties involved.
These are some of the first questions I ask a potential borrower when they want to apply for a home mortgage. By the time we have covered these we both have a good idea of whether the time is right or the benefits and rewards are worth it. No matter the outcome, I hope I make an impression that I am here to help with the process.
