Taking the Fear out of Applying for a Mortgage Loan – What To Do and What Not To Do

So you have found the perfect house and the realtor says, “Do you have a pre-approval letter?”  A what?!  Um, no, where do I get that?

Especially if you are a first time home buyer or really any new home buyer these days, it is very important to have your credit checked and your income and debt ratio numbers ran by a competent and trustworthy mortgage loan officer. And who should that be? Well, with all the changes that have occurred in mortgage lending over the past several years, all loan officers are definitely not created equal.

First off, contrary to popular belief, the best place is normally NOT your local bank. Most bank loan officers work for the bank and not you. They are often times inexperienced and unfamiliar with all the workings of lending these days and definitely do not always have the best rates. A professional mortgage broker with a good reputation and a long standing in the community is normally a good place to start. Your realtor will probably have one or two to recommend to you and you can check with your local BBB to see if they are a member and if there have been any major issues. Also, look at how long they have been in business. Most companies that have been in business locally for 10 years or more and have weathered the storm of the past several years are probably a safe bet. A local company with ties to the community will normally have and want to preserve a good reputation within that community.

Next, you will want them to run a tri-merge credit report to see what your qualifying score is and how that may impact the type of loan you can get and the rate you can expect. You will also get a copy of the scores from that lender so you have a record of what they are. IF the scores are low, your loan officer can discuss the possible reasons why with you.

You will want to have some items at hand for the questions that will then follow. Normally it is a good idea to gather up 2 years of tax returns with any w2 forms and 1099′s you may have received, 30 days worth of recent pay stubs, 60 days of recent bank statements for checking and savings, and any asset statements you may have for 401K’s, IRA’s, etc.

Additionally you should have an idea in your mind of what YOU would feel comfortable spending on a monthly mortgage payment and discuss that with your loan officer. Also you need to think about whether you will have available funds for a down payment or if you want to explore options for 100% financing. YES, these are still available and not as hard to get as you might think.

A mortgage broker can also give you options for your closing costs that a traditional lending source may not have. You can get closing costs paid for by the seller or you can finance some of them into the rate so that you have no additional out of pocket expense. You will be given a good faith estimate so that you can see everything that you may be responsible for. And most important, ask all the questions you want and ask again until you feel you understand everything that was explained to you.

Lastly, when you pick someone with the knowledge and the perseverance to get you to the closing table, the process will not seem as daunting as you had thought. Yes, things have changed - ALOT – over the last few years, but rates are unbelievably low right now and South Carolina, particularly the Upstate of our beautiful state, has come through it well. If you are even thinking about buying a home, this may truly be the absolute best time to do it and do not let the fear of applying for a mortgage loan hold you back!

Valerie Lee
Owner and President of Upstate Mortgage, Inc.
Locally owned & operated since 1993

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