The first time you buy a home can be intimidating. You are entering into a new realm of responsibility. For many, it is the transition from young adulthood to full adulthood. There are many aspects of home ownership that make people nervous, but for many first time homebuyers, applying for a loan is the most intimidating. Looking for your first house is fun, but going in front of a loan officer isn’t how most people would choose to spend a Thursday afternoon.
Applying for a home loan—and getting one—used to be easy. Not so long ago, you could walk into a mortgage office, provide an estimate of your income, and walk out with signed papers in hand. It may not have been that easy everywhere, but it was close. Today, lenders are much more selective in whom they choose to lend money to, and first time homebuyers can increase their chances of being approved for a home loan by knowing what to expect when they walk into a mortgage office.
Applying for a mortgage is not a difficult process, but it does require legwork on your part. There are documents that you will need to present to the loan officer that prove you will be able to meet your financial obligations to the lender.
As a recent Forbes article said, “The media has it all wrong – securing mortgage approval and satisfying credit underwriting guidelines are not the difficulties plaguing mortgage consumers. It’s in meeting the rigorous documentation requirements that most people fall flat. The good news is, the fix is simple. Just scan, photocopy, fax, and deliver every aspect of your financial life. Then, shortly before closing, check everything again.
Mortgage consumers who enter the mortgage approval process ready to battle their chosen mortgage lender will come out with a nightmare story to tell. As the process, requirements, and guidelines are the same for everybody, your mindset is the game-changer. Accepting the redundant documentation necessary for lender approval will make everyone’s life easier.“
The 4 Elements Needed to Apply for a Mortgage
- Your Credit Score
Most people understand that their credit score is a determining factor in whether they will or will not be approved for a home loan, but first time home buyers either don’t know what their credit score is or do not know what that number means. Don’t worry, your loan officer will be able to help you understand your credit score and help you to improve it.
- Income History and Proof of Employment
Mortgage companies want to know that you are gainfully employed and likely to remain employed. They certainly don’t want to loan money to someone with no source of income or a history of joblessness. For that reason, they require 2 years worth of W2s, 3 months of bank statements, and recent pay stubs before they will consider entering into a mortgage agreement with you.
- Other Assets
If you claim any additional income, you will need to prove you possess those assets such as income producing property, stocks, or other assets.
- Property Information
If you will be using the property you intend to purchase as collateral, the loan officer will want proof of the property’s value in the form of an appraisal. This step is omitted if you are applying for a mortgage preapproval letter. If all your documents are in order and you meet the lender’s requirements, you should expect no trouble being approved for a loan. The timeline for home approval varies depending on the type of loan for which you apply, but your loan officer will be there to answer any questions you may have during the process.
While the mortgage process is predictable and relatively straightforward, there are mistakes that applicants make when applying for a home loan that could cause their application to be denied. Learn more about mortgages and common mistakes and how to avoid them.
Powered by Facebook Comments