Are you getting ready to buy your first home? Maybe you’re looking to refinance or move up to something bigger. The more prepared you are for your loan application, the smoother the process will go. Before reaching out to your Loan Officer, here are a few steps you can take. You’ve got to be prepared!
Gather Your Paperwork
Sometimes your papers scatter to the wind. You don’t always know what a lender is going to look for. And that’s okay! Here are a few of the most commonly required items that your Loan Officer will need you to prepare.
- If you are salaried you will need to prepare your last two years of W-2s. You will also need to provide one month of pay-stubs.
- If you are self-employed you will need to provide two years of tax returns and a year to date profit and loss statement.
- To really speed up the process, bring along three months of bank statements. Do this for each bank, stock, and mutual fund account you have.
- Prepare copies of any stock brokerage or IRA/401K account that you have.
- Bring a copy of a divorce decree if it applies.
- If you’re not a US citizen you’ll need to provide a copy of your green card. If you’re not a permanent resident you’ll need to prepare your H1 or L1 visa.
Loan Officers will always order a credit report. To be sure that the report is accurate, get a copy yourself first. Doing this a few months before you decide to apply will give you a chance to review your report. That way you’ll have time to clear up anything that needs attention to prepare for your meeting with a lender.
Responsible handling of debts such as car payments or student loan debt shows a lender that you are going to be responsible with your mortgage.
What You Should Avoid
No Large Purchases.
Don’t make any large purchases while undergoing the Home Loan process. Don’t go around buying a big screen TV or a new car. This can affect your credit and can be detrimental to your loan.
Don’t Change Jobs
Taking a new job somewhere else can harm your income and can throw a wrench in your loan process. In fact, you should let your Loan Officer know before accepting a promotion. Especially if it will affect your income.
Do I Need To Be Pre-Approved?
There is a difference between getting pre-approved and being pre-qualified. Sellers will be more interested in an offer if it comes from someone who is pre-approved. Being pre-approved means you have taken the time to meet with a Loan Officer who checked your credit, verified your financial status, and checked your employment.
Getting pre-approved helps you in several ways. You can find out how much you can spend so you won’t waste time looking at houses you can’t afford. Negotiations with sellers will go over better because the seller will know your loan is already approved. And your loan will close quicker because your loan has already been approved. In fact, pre-approvals can be considered necessary in this competitive market. Real estate agents have been known to prioritize clients with pre-approval letters and even turn down those who do not have them. And yes, they will ask if you have one.
Shop Loan Programs and Rates
There are different loan programs out there to suit your needs. If the home you’re purchasing is one you’ll only be in for the short term, you might consider and adjustable loan so your rates are lower. If you’re prepared to live in this house for the long haul, you might considered a fixed-rate mortgage.
Shopping for a loan can be difficult with so many options to choose from. This is where an experienced Loan Officer comes in. They’re here to help walk you through the process and assist you in picking the loan that suits your personal needs.
Absolute Mortgage is not a tax consultation firm. Please seek advice from a tax professional.