9 Things Lenders Wish You Knew Before Getting a Mortgage Loan
The homebuying process can be daunting - whether you’re a first-time homebuyer or not. From finding the right real estate agent to getting a mortgage loan, it’s normal to feel a little overwhelmed. The good news is, if you’ve done your research beforehand, the process can be much less stressful.
To help you better navigate the process, we reached out to mortgage lenders across the US - all the way from Los Angeles, CA to New York, NY - for their advice. Here are the top 9 things they wish homebuyers knew before getting a mortgage loan:
1) It's never too early to talk to a lender, even if you aren’t ready to buy just yet
Sometimes it takes months or even years of planning, whether you need to pay down debt, increase your credit score, structure your income differently, etc. And the more lead time you allow yourself to prepare, the better. It’s most often the most significant loan you will obtain, so you want to make sure you put yourself in the best position to get the lowest rate - and the way to do that is through early planning. - Matt Maltese, Supreme Lending
2) Do your research to find the right lender for you
When seeking a mortgage lender, ask if the lender will service your loan. Finding a competitive rate is important; however, the servicer will be the partner you communicate with throughout the life of your loan. - Southern Bank
Make certain that your mortgage loan originator will help guide you when - and if necessary - in increasing your credit scores if it will result in significant savings. If the mortgage originator doesn’t have that capability then find one that does. Once you’ve identified a mortgage professional you want to partner with, work together to get your credit score to the best possible score as quickly as possible presuming you will be closing within 120 days. - Stephen B. McWilliam, Florida State Mortgage Group
3) Start saving early for a down payment
One of the most important things you will have to do when applying for a mortgage loan is to show that you have money for the down payment (a.k.a. sourcing). You can have this money available in your checking or savings account, borrow it from your retirement account, or even get the down payment as a gift. But, we must be able to find the source of the down payment. Keep in mind that cash is a problem when sourcing your down payment as you will need to put it in the bank and leave it for 60 days before we can use it. If you aren’t sure where your down payment is coming from, make a plan as soon as possible before applying for a loan. - Brett Sampson, Berkshire Lending
4) Know the difference between being pre-qualified vs. pre-approved
Pre-qualification vs. Pre-approval
Pre-qualification is when a potential buyer provides verbal information such as income, assets, and other items. Based upon that information, a loan originator can gauge if you might be able to buy a house. A pre-approval is when you have turned in supporting income, asset, and credit documentation, and the application is then run through an electronic underwriting system. - Coast 2 Coast Mortgage
Don’t just get pre-qualified, get pre-approved
Most buyers are only pre-qualified, and once they open escrow, not all the T's have been crossed. Being pre-approved is what all homeowners should be before making an offer. A pre-approval lets us lenders take a more in-depth look into a buyer's finances. And when the time comes and they’re ready to buy, they are more likely to close the deal with a pre-approval than just a simple pre-qualification. - CalUnion Funding
Get pre-qualified before you begin house hunting
Have a loan officer take a look at your financial picture to determine what you qualify for and get an estimate of what your monthly payment would be. Once you’ve been pre-qualified, you’ll know exactly how much home you can afford. - Blue Water Mortgage
5) When lenders review your application, they like to see consistency in your finances
Consult with your mortgage professional before withdrawing, depositing or moving large amounts of money in or out of your bank account. Avoid using cash for a good-faith deposit - cash is difficult to verify and could result in a closing delay. - Salvatore Tomaselli, Professional Mortgage Solutions
6) Don’t omit debt or liabilities from your mortgage loan application
People will sometimes decide to leave certain debts or liabilities from their loan application to be approved or to attain a larger loan amount. Omitting this information will only cause significant problems down the road and almost certainly end with the loan being thrown away. Mortgage lenders are here to help you through the process and be upfront and honest about your financial situation, so we need the same type of honesty from our clients. - Keypoint Mortgage
7) Having your documents ready and in order can make you a more competitive buyer
With home inventories at historically low levels in the nation, it's imperative to have your documentation and pre-approval in hand. You'll want to have your documentation and be pre-approved before your dream home becomes available. Having these items ready makes you a more competitive home buyer since you're showing sellers that you can qualify for financing, and you'll be more prepared when it comes time to apply for a mortgage. - Elder Finance Group
Regardless of the commercials that say, "you got this!" the fundamentals are the same - you have to show the ability to repay a loan you are requesting. Be aware that there are many qualifying factors, depending on credit score, down payment (if any), and the property you are purchasing. Understand that an approval via the internet may still need conditions - and prepare to supply them as quickly as possible. - Central Coast Home Loans
8) Remember, mortgage rates are not one size fits all, so don’t trust advertised rates
Some lenders advertise low mortgage rates to increase their chances of getting your business. In reality, trusting advertised rates could be a very costly mistake since they are often accompanied by points (that a buyer has to pay for) or low loan-to-value (LTV) requirements that make the rate more attractive. No lender can genuinely know your rate until they know about you, your credit, and your financial situation. Mortgage rates aren't one size fits all — it's essential for you to know that when researching rates and lenders. - Prime Lending
9) Think twice before taking a vacation the day after closing
We all love vacations, and it makes sense to get away from the stresses of life after closing on a new home. The problem is sometimes closings get delayed by sellers, title companies, appraisers, surveyors, realtors, and of course, mortgage lenders. There are a lot of people involved in getting your loan closed on time. While most of the time closings occur as scheduled, there are times when a delay occurs - and having a vacation planned right after closing adds a whole new layer of stress. - New Florida Mortgage
Originally published on Redfin