Financing can be a challenging process. We always suggest that Buyers use a mortgage broker. If you walk into your local bank and ask for a loan then they will try to match you with one of say 10 loan products which that bank sells. Mortgage brokers however take your criteria and shop it beyond the products that a single bank sells. Also, it’s always best to have a buffer in any scenario. The mortgage broker is taking your information and passing it along to the lender. For many buyers, applying for the mortgage loan is one of the more stressful aspects of buying a home. The loan application need not be a stressful time. By following a few easy steps, you will sail through the loan application process.
- Make a list of any questions you have about the loan program.
- Be sure you understand the advantages and disadvantages of the various mortgage programs for which you may qualify, including the advantages and disadvantages of Fixed Rate Mortgages versus Adjustable Rate Mortgages.
- Decide if you want to lock-in or float the loan’s interest rate:
Locking-in the rate means that the lender commits to the mortgage interest rate for the loan typically at the time the loan application is submitted. By floating the rate, you can lock-in the interest rate anytime between the loan application day and closing. Buyers opt to “float the loan” when they believe interest rates will drop after their loan application date and prior to closing. The risk is that rather than dropping, interest rates may rise, increasing the mortgage payment. - Decide if you want to pay additional points to lower your interest rate.
- Typically you can elect to pay additional points (each point is 1 percent of the mortgage loan payable in cash at closing) to lower the interest rate of your mortgage loan.
- Gather your paperwork!
- To get an idea of your new Mortgage Payments, please use our Mortgage Estimator.
Loan Application Checklist:
Below are some common paperwork requirements from Lenders, but the Lender you select may add or request additional documentation. Please do not delay this important process. The single most common delay in Closing is Financing! Buyers tend to procrastinate when gathering information for the Lender. Either the documents are too difficult to find, or it takes too long to find them. Please make the time! A later closing could end up costing you several thousand dollars more in closing costs!
Property Information (if you already have a contract on a house):
- Purchase Agreement
- Copy of legal description and MLS sheet
- If you are selling your current home, copy of listing contract
- If you have sold your current home, copy of settlement statement (HUD-1)
Income & Assets:
- Pay stubs for the last 30 days
- For the past two years:
- Names and addresses of each employer
- W-2s
- Statements for each bank, mutual fund, and/or investment account for the last three months
- Estimated value of personal property and furniture.
If you have made any large deposits to your accounts:
- Explanation and source for deposit.
If large deposit was a gift:
- Signed gift letter (lender can supply)
- Copy of gift check
- Copy of deposit receipt
If you own more than 25% of a business:
- Corporate or partnership tax returns
If self-employed:
- Tax returns for the last three years (with schedules)
- Year-to-Date Profit and Loss Statement prepared by an accountant.
If you own rental property:
- Tax returns for the last two years and current rental agreements
If you are retired:
- Pension Award Letter
If you receive Social Security:
- Social Security Award Letter
If you are counting child support as income:
- Copy of divorce settlement
- Copy of twelve months of cancelled child support checks
Debts:
- Names, addresses, account numbers, balances and monthly payments on all current loans.
- Explanation of credit report anomalies, including:
- Late payments, credit inquiries in the last 90 days, charge-offs, collections, judgments and/or liens.
- Bankruptcy filed within last seven years (bring a copy of your bankruptcy papers).
VA Loans:
- Copy of DD Form 214, Report of Separation.
Miscellaneous:
- Photo ID and proof of Social Security number.
- Residence addresses for the past two years.
- If applicable, a copy of your divorce decree.
- If you are not a citizen, a copy of the front and back of your green card.
