Mortgage Process Step #1
Welcome to the first step
in the mortgage process!
Welcome to the first step in the mortgage process!
The first step in the mortgage process is the documentation stage, where we review your income, assets, employment history, and other compensating factors to determine your ability to repay a mortgage loan.
This is also an opportunity for you to examine the overall financial impact that a new mortgage will have on your total monthly budget, so that you can choose a loan amount and mortgage program that you are most comfortable with.
Our goal is to obtain a speedy approval. The more thorough you are in preparing your paperwork, the faster we can move together on getting your loan approved and funded.
We believe communication is the key to a smooth mortgage process and we will hold your hand from the start all the way to closing.
While there are a number of factors outside of your control that can delay or prevent a home loan from closing, the following list will help you stay on the right path.
- DO get fully pre-approved. A pre-approval is issued after you have completed a full application and provided the supporting documentation to the lender, and will assure you of a more specific qualification amount and monthly payment.
- DO avoid credit inquiries or applying for any new credit, which can affect your credit score and debt-to-income ratios.
- DO start a savings plan, particularly if your loan approval requires you to have reserves (money saved in the bank) at the time of closing.
- DO pay all your bills on time. Just one 30-day late payment on a loan or credit card can kill your mortgage qualification.
- DO keep all of your personal documents including pay stubs, bank statements, proof of earnest money deposit, and other docs requested by your lender, as they will be required prior to closing.
- DO keep your Loan Officer Steve Grego informed of any major life changes including your marital status, change in household size, or change in household income (increase or decrease).
- DO line up a homeowners insurance policy. Steve Grego will let you know when we are close to needing the Insurance Binder. A copy must be provided so the lender can issue your clear to close.
- DO pay off debt, or keep it paid down. This will put you in a better financial position, and help with your debt-to-income ratios (part of your mortgage approval). Steve Grego will let you know if debt NEEDS to be paid down, and not racking up any new debt is important regardless.
- DON’T enter any deferred payment plans. This is a popular option when purchasing furniture, but resist the urge! Even if the payments won’t start until six months down the road, they will show on your credit report as debt and affect your debt-to-income ratio and possibly your credit score. I know, I know; you’re excited about your new home and want to go furniture shopping right away. But close on your mortgage FIRST! After your closing is final, you are free to make any of those purchases you’ve been holding off on.
- DON’T close any revolving credit accounts, even if they have a $0 balance. This could negatively affect your credit score as it will change your percentage of available credit, credit history, mix of credit, and account payment history.
- DON’T finance or charge any new debt or co-sign on any loans. New debt — even as a co-signer — will affect your debt-to-income ratio and credit score.
- DON’T acquire any NSF (Non-Sufficient Funds / overdraft) fees from your bank. Make sure the funds in your bank account cover anything being paid out; mortgage lenders look at these fees as an inability to manage money and a mortgage risk factor.
- DON’T change jobs or become self-employed without discussing it with your lender first. Your pre-approval is based on your current job history and income, so making a change — even if it is moving to a higher-paying job — could change your ability to qualify for your new home.
- Don’t worry – you got this! Now you are armed with the knowledge to make your home buying journey successful and stress-free! As always, we are here to help and answer any questions you may have about your mortgage, credit, home construction, or anything to do with purchasing the new home of your dreams – Call or email Steve Grego at any time!
The documents we’ll need to review include:
- Last two years W-2’s
- 30 Days worth of most recent pay stubs
- Two months worth of most recent bank and/or brokerage statements (all pages).
- Most recent 401K statement covering 60 days
- Copy of Driver’s License
- Contact information for your Homeowners Insurance Agent (i.e. – name, phone number, email address)
- Copy of your Purchase Agreement – Realtor’s name and phone number (when you buy)
- Copy of canceled Earnest Money Check (when you buy)
There may also be required documents we may need to review depending on your specific scenario.
Ready to learn more?
Go back to see the overall mortgage process.
Learn about the next step in the mortgage process.