Prior to shopping for a mortgage, check your credit and make sure there are no surprises. Contact the bureaus and dispute any items that aren’t yours, and possibly pay off a few collection items, or lower those credit card balances. Also, having an idea of how much house you can afford, as well as, an idea of what you can afford to put down on a house, and if you have adequate funds for closing costs would be a good idea too.
Credit wise, a score of at least 620 would be a good idea, though there are a few loan programs for borrowers with a lower score. These are considered Sub Prime loans, and can come attached with a higher interest rate and a higher mortgage payment.
Contact your local business bureau to locate a reputable mortgage broker/loan officer, or check with your own banking institution. Most states have a website of loan officers, and you can check with the state on the status of any complaints or problems with the loan officer you have chosen.
It is important to bring several documents with you to your first appointment with your loan officer. By doing this you will be doing you and your loan officer a huge favor, and saving a lot of time in the loan process.
1) a copy of your social security card and driver’s license. These are needed for your loan file per the Patriot Act, and verifies your identity and citizenship status (don’t forget a copy of your co-borrower’s info as well)
2) A copy of your last two year’s tax returns or W-2s for the last two years.
3) 3 months of bank statements – all pages
4) 1 month of pay statements
5) Copy of divorce decree – if applicable
6) List of currently owned real estate
7) List of all debt
8) Money order or check for cost of credit report and appraisal for property (your loan officer will be able to provide the exact amounts needed).
When applying for a home loan, take it serious, you can bet your loan officer will be. Please make sure you keep your scheduled appointment, and bring all requested documents with you to your interview. This will save time, and help to ensure a smooth loan application and submittal process.
Once the application process has been completed, the loan file will be submitted to either a loan committee or a lender (in the case of a mortgage broker). Normally, within 24-48 hours a lender will give a conditional approval, along with a list of conditions, or items to be met in order for the loan to be closed. Provide these additional items to your loan officer ASAP. Once the final conditions are cleared with the lender, a “clear to close” will be given, and loan documents sent to the title company. At this time your loan officer will contact you with the exact date, time and location of your closing. Make sure you show up with your identification and any funds needed to close (a cashier’s check is ideal).