First you’ll most likely need a mortgage in order to buy a home. In today’s world, before you even start looking at houses, you need to know if you can qualify for a mortgage. A lot of information and advice is available online but unless you know the ins and outs of mortgage underwriting and all the programs currently available to borrowers I always suggest you talk with your bank, credit union, loan officer or mortgage broker of choice. If you need names your Realtor® can usually provide contacts.
Meeting with the lender provides with guidance on which direction you need to go. Many of today’s borrowers have some minor problems with credit reports that need to be cleared or clean. The lender will walk you through the steps to clearing problems and, ultimately, getting a great credit score/report. Other potential borrowers may have to work longer (in some cases it may be years if they went through bankruptcy) and working with your lender to clear up problems before you actually start house hunting.
It’s important to understand that having good credit and letter from your lender stating you can obtain a loan is one the best tools buyers have when bidding on a property in today’s real estate market. In fact it’s really a informal requirement today.
Clearing up your credit is step 1 and step 2 “loan application” requires borrowers to produce reams of documentation….and I mean reams. It can be frustrating but don’t take it out on the lender (or your Realtor® ) it’s what the federal government requires. In addition to endless paperwork borrowers also have to pay attention to emails and phone calls from lenders and respond in a timely manner.
Processing your loan application and loan approval occurs in the background and while you may get requests for additional financial documentation you are not heavily involved in paperwork for the loan. However out-of-site doesn’t mean out-of-mind. Many lenders won’t communicate with your agent- so it’s up to you to follow up and make sure the loan is on track so you can meet the dates specified in your purchase contract.
Keeping Current Matters published a great infographic about the loan process-hopefully it will help you understand the “big picture” when it comes to securing a mortgage.