Prior to looking for a home, the first step you should take in the home buying process is to complete a mortgage pre-approval with a knowledgeable and trustworthy lender. Be sure to provide honest and accurate information to your lender. This will help the loan officer find the best mortgage options for you and ensure the fastest and smoothest loan approval process. The following suggestions will help expedite the loan process.
• Read All Documents – Make sure you thoroughly read all the loan documents. Ask your loan officer to explain anything that you do not understand. Never sign blank or incomplete documents.
• Be Truthful – Truthfully disclosure all your income sources and debts. Do not fabricate or alter any documents.
• Explain Your Employment History – Thoroughly explain and document any part-time employment or gaps in your employment history.
• Source and Document Your Funds – All gifts must be fully documented with a paper trail. Do not accept cash as a gift from a relative for the down payment. Only seasoned funds are acceptable as gifts.
• Credit Issues – Thoroughly explain and document all past credit problems.
• Educate – Ask your loan officers to explain the terms of the loan, including any prepayment penalties, variable rate features, and any stipulations on how to eliminate private mortgage insurance.
Once your pre-approval has been issued by the lender, be sure to ask your loan officer to review with you all the loan programs your pre-approval includes. If you are a first time home buyer, you may qualify for down payment assistance, a zero down mortgage, or a special interest rate. While looking for a new house, you may find a property that needs a renovation loan or a condominium that can only be financed with a particular loan type. If you are looking a newer house, a construction or draw loan may be the best mortgage type for you. Be sure you thoroughly understand all your financing options before finding the house of your dreams. During the house-hunting process, keep an open line of communication with your loan officer and discuss financing options and inform your lender of any major financial changes that happen between the date your mortgage pre-approval was issued and the loan closing. If any changes occur to your financial situation, such as: a new job, new loans, or large gift that you intend to use towards the down payment, be sure to inform your loan officer so he is aware of these changes.
Keeping your lender updated will eliminate delays and the surprise of a possible mortgage denial. Having a mortgage denied due to changes in your financial picture, especially after telling your friends and family you bought a house can be embarrassing and heartbreaking. Be sure to talk to your lender, so you have a thorough understanding of the mortgage requirements and programs available to you.