February 25, 2022
As a current homeowner, you’ve already gone through the home loan process. But depending upon how long ago that was, things could have changed quite a bit. Read on for a quick refresher on what to expect.
This is probably the most important thing you’ll need to retain throughout the process. Buying a home and getting the financing has many steps and involves multiple people. It’s essential to enter into the process with the correct expectations. Know that not everything will go 100% as planned. It’s similar to taking a trip on a plane. The pilot may come on the speaker and let you know there may be a little turbulence ahead. But since you expect it, you won’t be surprised. The same is true for buying and financing a home.
The sellers may or may not be easy to work with. The underwriter will probably have lots of questions and will require more paperwork. Roll with the punches, don’t stress, and you’ll be fine.
Speaking of paperwork, get ready to supply what’s needed. And all documents must be easy to read and have every single page – even if the page is blank. For example, if your bank statement has five pages, but the last page is blank – still supply it, or the underwriter will ask for it later. And when it comes to providing taxes, the easiest way is to ask your accountant to give you a PDF copy. The worst thing you can do is take a picture of each page with your phone and send it to your loan officer.
After completing the loan application, the information will need to be verified. That includes your employment and assets. Make sure to have good phone numbers for employment for the last two years. That will help things move along. Otherwise, if your work can’t be verified – it could hold up the loan.
Along with your employment history, your assets will be verified. It’s important not to make any large untraceable deposits into your bank accounts during this process. For example, if you have a stash of cash under your mattress, that would be hard to trace and could hold up your loan.
Word to the wise – don’t go out of the country on an extended vacation. Don’t take off on a trip where you don’t have cell reception for days at a time. Being unavailable can stop your loan and it could possibly get disapproved if there are vital questions that you’re not available to answer. So, be easy to contact via phone, text, and email throughout the process.
Protect Your Credit
When you apply for a mortgage, your credit is pulled. It will list your scores, open and closed accounts, and balances. Try to keep everything the same. Don’t open or close any accounts. Don’t let anyone else pull your credit. Don’t run up more debts. Try and keep everything just like it was when you applied. That’s because before your loan closes, the underwriter will have your credit pulled again. So, if you’ve gone out and bought a car, opened or closed accounts, or done anything that lowers your score – that could put the skids on your home loan.
Retain Your Assets
If you have $10,000 in the bank to cover closing costs and a down payment, make sure to set that money aside and don’t use it. It’s easy to get excited about moving into a new home. Try not to shop for appliances and furniture until after you move in. Before you close, the underwriter will want to make sure you have the funds you started with. Make sure and retain your assets until after the loan closes and you have the keys to your house.
Just like we mentioned above, try not to go out and start shopping for furniture, appliances, window coverings, fencing materials unless you have to and have the extra funds to do so. Wait until your loan closes and you have your keys in hand. Need a car? If possible, wait. But for sure, before you incur any more debt or use the funds in your bank accounts, check with your loan officer first. Many times a home loan fell out of escrow because the buyers leased or bought a new car, boat, or motorcycle.
Besides your basic mortgage payment, be aware of additional costs like HOA dues or flood insurance. If your budget is tight and you’re barely qualifying for a certain amount – adding HOA dues or flood insurance can put you over budget. Let your realtor know the top of your budget and maximum payment amount. If there are any additional costs, talk to your loan officer to ensure you can still qualify.
Once you find a home and you’ve put in an offer that’s accepted, it’s time for inspections. Even though most states don’t require a home inspection, it’s still a good idea to get one. However, don’t expect the sellers to fix everything on the list. Home inspectors go through the house with a fine toothcomb. You’ll get a multi-page report listing everything wrong with the house. Some items will need to be remedied immediately. Other things can wait. After that comes the appraisal.
With any purchase, there is usually some type of negotiation. If it’s a buyer’s market, you’ll have a better chance of getting the seller to fix some items. In a seller’s market, don’t expect that to happen. And if the appraisal comes in lower than your offer, it’s back to the negotiation table. If it comes in higher, that’s good for the buyer. Keep in mind that both the appraisal and home inspection are your reports, and you’re not required to share them with the seller.
Just when you think you’re close to the finish line, don’t be surprised if you’re asked for more paperwork. Maybe a document or page was illegible. Or, if you started this entire process months ago, you’ll need to supply updated paystubs and bank statements. Be willing and flexible, and everything will go much smoother.
Think you’re close to the end? Expect more questions from the underwriter. Anything that isn’t clear or if there’s missing data – they’ll notice and ask about it. Expect this and roll with the punches. Doing that will reduce stress.
Time to Close
It’s finally time to close and move into your new home. Although you’ve purchased a house or two before, every transaction has its challenges—Pat yourself on the back for supplying everything needed and closing on your home loan.
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