February 25, 2022
Although filling out your mortgage application takes time and is a big step, it’s just the beginning. You’ll have quite a bit of work ahead of you. So read on to discover the steps and learn how to prepare.
Once your application is complete, you’ll need to supply documentation backing up your income and assets. In the meantime, your loan officer will pull all borrowers’ credit. The basic documentation you’ll need is:
- Government IDs – drivers licenses
- Two months most recent bank statements
- 30 days most recent pay stubs
- Two years tax returns
Ask your accountant for your taxes in PDF form to submit them.
Everything on your application will need to be verified, including your address for the last two years. If you’ve been renting, have a good phone number for your landlord. The same goes for your employment. Ensure you have the current phone number for your HR department or whoever verifies employment.
If you’re a business owner, your loan officer will let you know what additional information you need to supply, like a profit and loss, business license, and business tax returns.
How much down payment do you have saved up? That along with your credit are the two significant determining factors for the type of loan program you’ll qualify for. And as you move along the loan process, make sure to retain all of your down payment funds. Don’t spend it on anything else.
Your down payment and borrower credit scores will determine which mortgage loan you could qualify for. Here are the basics for:
- Conventional – you’ll need at least 3% to 10% down, and a credit score of 620.
- FHA – you’ll need a down payment of 3.5% and a credit score of 620.
- VA – doesn’t require a down payment and your score should be least 620.
Guard Your Credit
Keep your credit the same (or better) as you're moving through the process. Don’t apply for any new credit or run up additional debt.
Keep Your Job
Make sure you don’t change jobs or careers. Talk to your loan officer first if you’re considering any big changes. Otherwise, your loan could be in jeopardy.
After you’ve had your credit run, supplied all the basic data, demonstrated you have down payment funds, you’ll get a pre-approval letter you can give to your realtor. Now it’s time to start shopping.
Shopping can take weeks to months. But once you’ve found a home, it’s time to put in an offer. Along with the offer – you’ll need an earnest money deposit. This is part of your down payment funds and shows the seller you’re a serious buyer.
After your realtor turns in your offer, there may be some negotiation back and forth. But eventually, hopefully, an offer will be accepted. Sometimes you have to put in several offers on different homes. Don’t give up. It takes persistence, especially in a seller’s market.
When your offer is accepted, it’s time to lock in your rate. You’ll also have the option to buy down the rate if you’d like to lower it even more. Talk to your loan officer for more information about locking and buying down.
Your file has been in processing to verify all of your information and then onto underwriting. If the underwriter has any questions or needs more documentation, make sure to respond right away to keep your file moving along. Be proactive and willing to provide what’s needed.
Before you go to sign the paperwork, you’ll do a final walk-through of the home with your realtor. This usually happens about 24-hours before closing. You’ll want to make sure everything is in the condition you expect, and that the HVAC is working. It’s also an excellent time to make certain your utilities will be on when it’s time to move.
Once you receive the final approval – also called “clear to close,” your loan officer and realtor will coordinate scheduling closing either at the title company or your home. You’ll be given directions for any additional funds you’ll need to provide. Follow these instructions carefully and stay in close contact with your loan officer and realtor.
Finally, all of your hard work has paid off. It’s time to move into your new home and celebrate. Being a homeowner is exciting, and you’ll have many years of memories, celebrations, and fun DIY projects ahead of you.