Getting a mortgage takes more than the click of a button, but it doesn’t have to be difficult.
Follow these steps below to set yourself up for success.
Often confused with a pre-qualification, a pre-approval demonstrates your lender’s willingness to lend you money, while a pre-qualification is only their best estimate how much you could potentially borrow. To issue a pre-approval, your lender will require detailed financial records, including 30 days of paystubs, federal tax returns, W-2s, and proof of funds, to name a few.
Ace The Home Appraisal
Lenders require a home appraisal before they’ll issue a loan, because the home you’re buying is going to serve as collateral. If the home’s appraised value is the same as what you've agreed to pay, you’ve passed the appraisal. If the appraisal comes in at a figure higher than what you're paying, you’re golden—in fact, you’ve gained instant equity! But, if the appraisal comes in lower than what you've agreed to pay, you can address it one of a few ways: negotiate with the seller, appeal the appraisal, order a second appraisal, or walk away.
Keep Your Credit Score Stable While Under Contract
Depending on the loan program, lender, and applicant’s specific credit history, the minimum credit score necessary to buy a home varies; but regardless, your credit score must remain stable while you’re under contract on a house. Why? Because the lender’s final clearance and a loan commitment are subject to a last-minute credit check (and other verifications) shortly before closing. So avoid doing any the following while under contract: opening new credit accounts, including financing large purchases like a car or new furniture; closing old credit accounts; missing or making a late payment.
Pass The Underwriting Process
Before your lender issues final loan approval, your mortgage has to go through the underwriting process. Underwriters are like real estate detectives. It’s their job to make sure you have represented yourself and your finances truthfully, and that you haven’t made any false or misleading claims on your loan application.
Underwriters will pull your credit score to make sure it hasn’t changed, review your new home’s appraisal to make sure the value is good, and may also contact your employer to verify the information you submitted.
If you’ve been diligent about keeping your credit score, job status, and debts stable, you’ll pass with flying colors. If the underwriter has a question, don’t panic—the best thing you can do is respond with prompt and complete information.
Don’t hesitate to reach out to your agent for help as well; with a wealth of experience to draw from, we can help you troubleshoot any issues.