Preparing for the Mortgage Application Process

For first-time home buyers, the mortgage application process can seem like an obstacle course. You hand off all your personal information, jump through the qualifying hoops, and clear the lender’s hurdles.

Gathering as much information as possible about your finances before you start your application will help you better prepare to find the best mortgage for your needs.

When you apply for a mortgage, your credit report will be pulled to determine your available credit and whether you’ve made your payments on time.

Surprisingly, only one-fourth of applicants know what’s on their credit report. Of those applicants, about a third found at least one error on their credit report. Errors in your credit report may lower your credit score and your chances of getting a loan.

Before you start house hunting, order a copy of your credit report and review it carefully. If you find errors, notify the reporting agency right away.

Most prospective home buyers shop first for a home, then for a mortgage. Reverse the order and get preapproved for a mortgage first.

Preapproval helps you in two ways: it tells you how much house you can afford and makes your offer stand out from the crowd. The seller will be more interested in a buyer with approved financing than in another buyer waiting to get approval.

To apply for a mortgage, you must provide documentation that verifies your income, assets, and debts. Be prepared by gathering the following information:

  • Your current residence address and any additional addresses from the last two years
  • Social Security numbers for all borrowers
  • Employment history for the past two years
  • W-2 income tax statements for the past two years
  • Last two years of all signed and dated income tax returns
  • Copies of Social Security and pension award letters (if applicable)
  • Copies of your two most recent pay stubs
  • Checking and savings account statements for the last two months
  • Most recent pay stub with year-to-date earnings
  • Credit reports
  • Photo ID
  • Rent history (a year’s worth of canceled rent checks or a letter from your landlord)

You’ll also need to decide on a down payment amount and choose your mortgage type: 30-year vs. 15-year.

When applying for a mortgage, you have many choices: conventional, fixed-rate, adjustable-rate, government loans, and so on. Ask us for information about the types of mortgages and the best option for your situation.

Remember, the interest rate is only part of your mortgage costs. Closing costs—loan origination fees, points, etc.—can run anywhere from 3% to 7% of the purchase price. So, when comparison shopping, ask for an estimate of closing costs as well as interest rates.  Also, consider that you’ll be dealing with your lender for the life of your loan – perhaps 15 to 30 years – so choose a company that’s reputable and customer-oriented.

As a first-time home buyer, you may have many questions.  Working face-to-face with us – your local, trusted lender provides you with a personalized experience.  We’ll help you clear the hurdles to home ownership and provide a seamless experience. For more information, visit our mortgage page or contact our mortgage specialist, Melissa Cummings, at 352-588-2732 ext.2221.