Applying for a Mortgage
Mortgage Application Prep and Tips
Applying for a mortgage can be a daunting task, particularly if you are a first time home buyer. Having a heads up can go a long way!
Here are some of the common things most folks know to consider;
- They check your finances
- Downpayment amount
- Employment verification
- Pre-approval amount
Beyond the basics, there are a few things you can do if you are getting the process going for applying for a mortgage.
5 Tips to a Smooth Mortgage Application Process
Stop Shopping. Prospective mortgage companies will be evaluating your finances, which includes bank accounts and credit card debt. Avoid large purchases particularly if you have already started the application process. You may need to hold off on purchasing cars, furniture and the likes. Your debt to income ratio is incredibly important!
Get Tax Returns Together. Dig out 2-3 years of tax returns (May need more if you have had large fluctuations in income). You may need to involve your tax preparer to provide PDF copies, but it’s likely your mortgage company will want to see income trends for historical years.
Individually Employed or SMB? Get your boots on it’s about to get muddy. For individually employed folks, small businesses and the likes, you may need to go the extra mile. On top of tax returns, profit and loss statements, balance sheets and corporate filings, you may need to furnish letters of intent from your clients as well as show adequate time in business.
Shop Rates and Mortgage Companies This can get tricky. Once you start the pre-approval process, you will have your credit ran. Getting multiple pre-approvals can be detrimental since it shows multiple credit report fetches. Have a good idea of where your credit stands and do some preliminary leg work to get an idea on rates before you commit to a mortgage company. Think about the terms (15 or 30 years?), interest rates, penalties for pay off or extra payments, etc.
Audit Your Bank Accounts The mortgage company will be combing through your bank accounts to ensure every penny is accounted for. If your have large cash deposits (Say wedding gifts, etc) you will need to provide an explanation. Being prepared ahead of time can save headache and scrambling at the last minute. Avoid moving money around and keep things as basic as possible.
Buying a home is a stressful, exciting and amazing process! Having a realistic outlook on applying for a mortgage can go a long way. Happy house hunting!