By Jeremy DeLay, Tulsa Home + Design Realty
Buying a home can be a daunting task. One of the less fun parts of the process is applying for a mortgage. Depending on your personal circumstances, this process can vary greatly in ease and timing. In this article we are going to look at 5 things that you can do to help you have as smooth a mortgage process as possible:
- Do your research.
- Have your information ready.
- Don’t make any major changes.
- Know what could cause delays, and be prepared.
- Be patient, it’s a process.
Do your research. The best thing you can possibly do before starting the process of securing a home loan is to know what’s ahead. A good lender/loan officer will be able to walk through the entire process with you and help you understand what’s happening. So, the first thing you want to make sure you do is find a lender you can trust and are comfortable working with. This is one of the largest purchases you’ll make in life, and you’ll be sharing a lot of personal financial information with whoever you choose. Shop around for mortgage lenders until you find someone that you feel ready to move forward with. Beyond just the actual person you’ll be dealing with (in reality it will be a small team of people) make sure you have a basic understanding of the different types of home loans available to you and know which one is best for you. Again, a good lender should walk you through this, but do your research. Knowing what you’re getting into and who you’re working with will help you get the best start possible.
Have your information ready. Typically, when your application goes to underwriting, they will do a deep dive into your personal financial history and situation. The specific documents needed for your loan application will vary based on the type of loan you are receiving from your lender or underwriter. Some of the things they may want to take a look at include your tax returns, W2s, pay stubs, credit report, and debt-to-income ratio. If you aren’t sure what you may need, or want a more definitive list, ask your local bank or lender for a mortgage checklist. By knowing on the front end that they will be requesting this information and having it ready to send over, you save yourself and your lender precious time. You’ll also want to be prepared for requests for additional and clarifying information. If something seems out of place, on your bank statement, for example, they will want documentation explaining what’s going on in order to keep a well-documented paper trail leading to their final decision to approve or deny the loan.
Don’t make any major changes. When you are going through the home loan process, you may not realize that everything you do, even after being pre-approved, can have a major impact on your ability to actually secure a home loan. The good news is that it’s no mystery what you should and shouldn’t be doing during this time. Here are a few dos and don’ts to keep in mind as you’re going through the process. Don’t open any new credit cards, lines of credit, or any other type of loan or major purchase until you’ve closed on your loan. Every time someone runs your social security number for a credit report this affects your credit score and your ability to ultimately secure the loan. On the flip side, you Do want to continue to make your regular payments for any outstanding debts. Basically, keep things as steady and typical as possible while your application is being reviewed. Any major changes, in job status, living arrangements, credit, debt, income, etc. can potentially cause you to lose out on the loan, so just give yourself a month or so of no major changes.
Know what could cause delays, and be prepared. Typically, you can expect about 30-45 days to close on a house, with the actual average being 51 days. There are a number of things that may come up during the home loan process that can cause delays to the timeline, so to keep things moving along as smoothly as possible, it’s good to understand what they are and how to be prepared. One thing that was mentioned earlier is the underwriter coming back and requesting clarification and additional documentation. Being ready to quickly respond to underwriting questions and requests is perhaps the most important thing you can do to keep things moving forward quickly. Beyond your own response time and ability to answer questions, some of the other common things that cause delays relate directly to the dos and don’ts section above. If there is any issue that shows up on your credit report that wasn’t previously disclosed or that happened since starting the loan application, this will certainly hold you up. To that point, an incomplete application is likely to lead to questions that need to be answered and again will slow things down. Knowing what’s coming, being prepared, and being as thorough as possible will set you up for success as you begin your loan process.
Be patient, it’s a process. When you apply for a mortgage, your file changes hands several times, and when you’re waiting to know if you can buy a home, this process can seem like it takes forever. After you submit your application to the loan officer, they send it over to underwriting. From there, underwriting will communicate with you to get everything they need, as was mentioned earlier. Once you clear underwriting, they pass you along to processing, who reviews, gathers, and submits your paperwork over to the last step, which is closing, who gets all your closing documents prepared and balances the final numbers. This can seem like a lot, and it helps to know ahead of time that it can take a while and be mentally prepared for that.
As with so many things in life, knowledge can be your greatest asset when it comes to real estate, and specifically the mortgage process. If you’re thinking about buying a home and need some help finding and selecting the right lender, Tulsa Home and Design Realty would love to help.
*At Tulsa Home + Design, we work with clients at every step of their home-buying and owning journey to help them find and create spaces to live and grow. Call us today. www.tulsahomeanddesign.com