Get your documentation in shape

Mortgage lenders today are particularly efficient about getting as much financial information on a borrower as possible to confirm loan repayment will not be a financial hardship or become too difficult for the borrower.

In recent years, borrowers were applying for loans they obviously were unqualified for and as a result a vicious cycle was created. This was the root cause of the problems in the mortgage industry and housing market that resulted in a mass occurrence of foreclosures across the country.

As lenders try to come back from their mistakes, they are making sure that all i’s are dotted and t’s are crossed. You will need to speak to your chosen lender in advance about what kind of information and documentation will be needed for the loan application. You will likely need some lead time to gather your income statements, your previous tax records and other detailed financial information.

Enroll in a class

As a first-time homeowner, the amount of information you will have to take in can be overwhelming. With the unfamiliar terminology and the amount of financial information that will be processed, it may be in your best interest to take a class for first-time homeowners.

Many local governments offer these classes for free or for a low fee. You can get more information from a local realtor about classes if you can’t find one on their own. Most classes only last a few days and can be highly educational. Some mortgage programs, such as those through the government, will require classes be taken in advance of the mortgage approval process but even if it’s not a requirement, you can certainly benefit from the information provided to potential homeowners.

Stay on top of things

Throughout the mortgage process, there will be a lot of paperwork and information being passed around. The lender, the realtor and other companies will be sending you information for months. Keep a dedicated file where you can keep all of your documentation in one central location for easy access. Any lost documents or information that delays the loan process can jeopardize your loan approval and will certainly stretch out the entire home-buying process.

The more you know about mortgages and the more prepared you are to go through the process, the more likely the experience will be a smooth one, even if you are a first-time buyer. Continue to educate yourself on mortgages even after you’ve completed the process. If you are ever interested in refinancing your current mortgage or buying a different home, you will be armed with the information needed to get the job done right.

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  • In my experience banks rarely have the best programs or closing cost scenarios. A borrower’s best bet is to contact a local fully independent mortgage broker and see all of the programs that are available to them.

  • Jeo Ten

    This is laughable … a quick story: I was a Bank of America customer for years (not necessarily by choice, but because they kept acquiring the bank I was at … 3 times across 3 states). Last Jan, as a Premier customer, with a mortgage with BofA, I chose them to refinance. I had fantastic credit, the property appraisal came higher than expected, BofA held the existing mortgage, no cash out, and I was refinancing the new one.

    It took 6 and 1/2 months! It was ridiculous. To be honest, a refinance like mine should take 30 days max … even less really. Earth to Banks and US Government: Here’s how it should work … home owner calls bank, they do a credit check, employment and income verification, an appraisal is done within 5 days, and then they have me sign a single one page document via DocSign confirming the interest rate or term change, and flip a software switch to recalculate my payments going forward. Simple !!!! Hello … simple! This refi required 10 trips to my local branch to Fax a gazillion documents because BofA (and most banks) are not living in the 21st century. They don’t have an efficient method to delivery documents … ever heard of DropBox?. Ding!!!!

    It’s 2013 … the 21st century last I checked … our government and financial institutions are burying this country in debt and inefficiencies that are beyond comprehension. It’s shameful. I’m venting … so thanks for listening.

  • Tahnya Kristina

    This is great advice. I work as a financial planner in a bank branch and I am always surprised when people show up at a bank and expect to be approved for a mortgage when they have no idea how they stand financially. When people come into the bank for a mortgage pre approval I always advise them to gather all of their bank statements and order a copy of their credit bureau to make sure that there is nothing fishy being reported. Great post, I am going to share it on Dinks Finance next week.

  • Terry

    Absolutely agreed, and increased scrutiny of borrowers should be
    expected. Of course people bemoan this, but it’s just the way it is
    today. Also, the consumer can expect dysfunction when dealing with the
    big three credit reporting agencies. Regardless of what any of them
    claim, they often do not act and operate in the primary best interest of
    the individual consumer . Expect this also. This has only improved
    slightly since now by Federal mandate, consumers now have a right to
    their credit information. Lots of individual consumers don’t realize
    this wasn’t always the case. Absolutely spend the time in planning
    necessary and pursuant to obtaining a mortgage. Pay the small monthly
    fee that Experian, Trans Union and Equifax charge for unlimited
    electronic access to this information. Address any inaccuracies. People
    may be astonished what lurks in their files. Bottom line, get all
    inaccuracies corrected, and address any issues that may be a bad mark.
    It may definitley take some effort and patience when dealing with the
    credit bureaus, but be thorough and persistant. Know problems ahead of
    time and FIX THEM! There is so much consumer personal financial
    information available to us now that was not available even ten years
    ago. All consumers should be diligent, and vigilant when necessary in
    maintaining their information as independently as possible. Sure, it
    takes time and effort to do the research, but it is worth it. And when
    it comes to the banks, credit reporting agencies, and mortgage and title
    companies, follow the money, question everything, and trust no one. Look at all your options for mortgage including owner finance, perhaps with trusted legal council (oxymoron?). And, if stuck between and bank and a credit union. GO WITH THE CREDIT UNION!