We have received many questions over time about ways to help customers during the mortgage process. We have decided to compile the most frequently asked questions into this article and hopefully make it a good place to refer back to.
Things that will help you during the mortgage process:
Be careful making too many credit inquiries within a short period of time as this can lower your credit score. Be smart about when you make inquiries, and understand your options before you take action. This will keep you from making any mistakes that come from hasty decision-making.
Do your best to pay your bills on time and have a disciplined saving pattern. These are the things that make you a successful homeowner and look good on credit reports. Also, be sure to make your debt payments on time. Doing things like these can lower your credit score and affect the interest rate on your loan.
If you do miss a payment, missing a credit card payment first would have the least amount of impact, followed by installment loans, and lastly payments on an existing mortgage. This is because credit scoring programs look at how you treat loans of similar types before others when deciding what credit score to give. In this way, you prioritize what they will be looking at and improve the way they see you.
Another thing you can do is pay off more of your debt and put down a smaller amount at closing. This will leave you with a higher mortgage, but it will allow you to replace non-tax-deductible, high-interest rate debt with a lower-rate mortgage debt with deductible interest.
If you are expecting lots of financial expenses in the future, get the mortgage first. As we mentioned before, multiple credit inquiries in a period of time can be harmful to your credit score, especially when filed in the months prior to the home loan review process.
Save as much as possible, as often as possible. In this way, you can increase the size of your down payment.
Things you should consider doing during the mortgage process:
Be careful making any big purchases in the next couple of months. This will make less money available for your down payment and may require you to take out another loan.
Additional purchases may add to your monthly expenses and make it difficult to qualify for the loan that you want.
The real estate transaction and financial transaction close on the same day. In order to prepare for that day, clear your calendar. This will be a time-consuming event that will have you reviewing many legal documents and will require your full attention. With a clear calendar, you won’t have to worry about anything except reviewing of the documents, without the pressure of time or the stress of having to be somewhere else.
Review the loan documents in advance. This will make sure that there are no surprises on the document, like typos or errors, and will prepare you for your loan closing.
The closing disclosure is an important document that should be received three days prior to closing and lists the final charges relevant to you and the seller based on the terms of your contract. Make sure to compare to your original loan listing and make sure that the rate and terms are what you expected and agreed on; otherwise, you will need to get them fixed.
Be prepared for closing costs. A cashier’s check is better than an electronic funds transfer, because depending on the day an electronic funds transfer may have to wait to be processed if banks are closed, delaying your closing. These costs include fees, taxes, charges, and the down payment.
Make sure the home is ready to live in. If the other party promised to make repairs, make sure those repairs have been made. Many complications could arise if the deal is struck and you haven’t received the full end of your bargain.
Lastly, try to get pre-approved. This will allow you to leave as little to chance as possible and will give you the ability to act quickly in a quickly changing market. This also lets the seller know that you are taking them seriously, and in return, they will treat you seriously.
When you are pre-approved, you have the ability to:
- Make an offer with confidence, knowing the lender is on your side.
- Save time by only looking at offers you can afford.
- Negotiate a better price for the home you want to buy.