As you get ready to buy a new home, you’ll likely need to get a mortgage lined up. Commonly, a loan approval will come with a lot of paperwork. Because of this – and to make working with your lender as smooth and stress-free as possible, it’s helpful to understand these 5 things your mortgage lender wishes you knew.
Insights from your Mortgage Lender
Even before you reach out to speak with your lender, do some research on the topics below. Plus, once you’re approved for the loan and put in an offer for your home, there will be a tight timetable to complete the paperwork. Knowing some of these things before you get started is helpful.
What’s the Difference Between a Pre-Qualification Letter and a Pre-Approval Letter?
Simply, a pre-qualification letter is based on an estimate of your financial circumstances. They will ask you some questions about your income, debt, and overall finances. It can likely be handled over the phone and sent to you through email or a portal.
A more in-depth investigation will occur for your pre-approval letter to give you, your lender, and the seller a verified review of your borrowing ability. You will need to provide documents to verify your income and have a credit check performed. The lender might also look at bank records to evaluate your overall financial situation.
Ask your lender how long the pre-approval letter will be active. Usually, they will expire after 30-90 days, depending on the lender.
What Documents Will a Buyer Need to Obtain Their Pre-Approval?
Mortgage lenders will ask you to provide things like your pay stubs, tax returns, bank statements, and credit reports. They might ask to see your driver’s license, current mortgage agreements, employer agreements, or more. The extent of what they want to see can depend on the lender. You can ask them when you consult with them to help you decide on a good fit.
What Does Your Credit Report Look Like?
If your credit report is in rough shape, taking care of any large medical debts, bankruptcies, tax liens, or other collection issues before applying for a home loan will likely put you in a better lending position.
Check your credit score through AnnualCreditReport.com or credit.com for a free credit summary to understand what your number looks like before you plan your home-buying budget. Understanding what this number looks like and how to improve it can be helpful in guiding your timeline process and possibly increasing your budget expectations.
How to Address Cash Gifts
A cash gift is a nice bonus, but it will need to be validated. Both the borrower and the gifter will need to sign a gift confirmation letter. With certain loans, a gift needs to be confirmed that it is not a loan, and it needs to be tracked through proper bank channels from both parties.
What Not to Do Before Applying for a Mortgage
As you work through the loan process to buy your new home, refrain from making any larger purchases. It may be tempting to purchase the new furniture you had in mind, update your car, or even add upgrades to the home you are in so you can sell it.
Avoid doing any of this until you at least speak with your lender for advice. They will likely ask for more paperwork, and it will possibly delay or affect your closing.
How Can I Improve My Chances of Getting Approved for a Mortgage?
Do a little research, gather your financial details, and understand your situation before you start shopping for a vendor or a new home. Make a budget based on your review and calculations, and the process with the lender can go smoother. Make note of any questions you have and set aside some time to inquire with your lender to make your chances of getting approved easier.
Working with an Experienced Memphis Area Real Estate Agent
When it’s time to sell your existing home or buy a great new place, turn to a highly regarded and well-informed local real estate agent. You want someone who you can trust to give you the best advice and know-how for your new home purchase or sale. Check out my other great real estate articles to help you through your home selling and buying experience here in Memphis. Staging homes for sale is also part of my expertise. Please ask me about it when you reach out.
Take a minute to learn more about me. With over 20 years of top-notch service for my clients, I can guide you with your house sale, new home purchase, or buying a great parcel of land. As a top, licensed real estate agent in the Memphis area, showing you the best properties for you and your family is my goal!
Contact me at (901) 828-8919 or drop me a quick note at angie@angiekelley.com and we can speak in person about your plans and options.
