Tips on how to stay cool when getting a mortgage in today’s market.

If you haven’t refinanced or obtained a mortgage in the last few years be prepared!  The process is time-consuming, invasive.  I have warned clients to get ready for questions about shoe size and eye color of their first born.

No lenders don’t actually ask those questions.  However, it’s good to know that the questions and the amount of information required can fray anybody’s nerves.

The Basics

Starting serious house hunting and you’ll need to get a pre-approval and/or prequalification letter.  Serious buyers have their documentation ready for the next step -applying for a mortgage.  Since much of the required documentation may not be readily available- start pulling paperwork together now.

To start the process the lender needs:

• Tax Returns
• Pay stubs, W2’s or other proof of income
• Bank statements and other assets
• Credit History
• Gift letters (if applicable)
• Photo ID
• Rental history (if applicable)

Next Step

Based on your application and documentation you may be asked to answer questions in writing. For example, the home your buying is 100 miles from your work location- are you working from home or opening a new location.  $4,000 suddenly appeared in your savings account-why.  Wedding checks deposited or sold a motorcycle? 

The lender needs to understand where all your money comes from.  

Your answers need to be understandable and detailed.  If you don’t understand the question, you need to ask for clarification.  Getting a mortgage is a “team sport”.  Lenders are required to document every tiny detail and ask for explanations when they cannot connect the dots. 

Humans Versus Computers- Always Keep Copies

Like most things today much of the loan process is automated.  Try not to lose your temper when the lender calls for a copy of something you already provided.  Remember humans can make mistakes.  Paper can be misfiled or numbers can be entered incorrectly.  Last minute requests for missing documentation are quite common and frustrating.  Always keep copies of everything you submitted -just in case.

The final tip seems like common sense but…..

After you apply for a mortgage to keep your spending down.  Do not go out an buy a new car, boat or other expensive items.  Many buyers assume that once the mortgage process has started the checks on their credit ends.  False!  The lender performs several credit checks including one right before closing.  Realtors® have stories about deals that went down at the last minute when the buyer bought a new pick up truck, boat or giant tv with surround sound system before closing.

Required documents