- Posted by: steve
- Category: mortgage application
Are you purchasing your first home? We’ve created this post to give you 6 tips for filing your first mortgage application, Click here for valuable tips.
There is nothing more exciting (and sometimes terrifying) as filling out an application for your first mortgage!
Perhaps you are purchasing your first single family home, or maybe you’re buying your own apartment in the big city.
Filing for a mortgage requires a lot of thought, and perhaps a few hoops to jump through too. Depending on which lender you’re going with, the process can be fluid or difficult.
There are a few things to consider as you jaunt down the road to ownership of your first property. With the percentage of Americans who can’t afford their homes up 146% this year, you’ll want to make sure you do it right.
We’ve done the heavy lifting and eliminated the basics.
Here are 6 essential tips for a seamless process with your mortgage application:
1. Crunch The Numbers
You’ve chosen which property you want to buy.
Perhaps you are seeking pre-approval to make a winning offer. Maybe you are going to make an offer and then negotiate. Whatever your plan, be extremely thorough in your number crunching to see exactly what you can afford on a monthly basis.
By knowing how much you can afford monthly, you’ll know exactly how much you need to offer as a down payment.
If you can go bigger on your down payment your total interest paid will be much lower in the long-run. Putting down 20% is ideal. However, if you can offer up a little more it’s even better.
If you put down less than 20%, you’ll end up paying additional fees on PMI (Private Mortgage Insurance.) Being prepared to make a substantial down payment will lessen your load throughout the loan agreement.
Don’t Forget The Extras
Also consider the extras: property taxes, homeowners insurance, and repair and maintenance costs.
If you’ve done the math and you think you have a monthly mortgage payment that’s doable but you haven’t added the additional taxes in, you may be in for a surprise. The extras always add up and can take your monthly mortgage payment higher than you’re comfortable with.
Be thorough with your numbers.
Check all of the details through your real estate agent. School and state taxes vary from state to state. When shopping, take all of this into consideration. After all, if your maximum budget is $200,000 for a home and that’s your top number, there may be an extra $20,000 in yearly taxes which might just not be doable for you right now.
2. Get Your Ducks In A Row
When you start the application process, a lender will ask you for numerous documents.
Start the process off right by having many of these already printed and in a file. You’ll need the W2’s from your previous year of work, recent pay stubs, tax returns from the past two years, and all of your checking and savings account numbers and amounts.
If it’s your first time doing a mortgage application, you probably don’t have any other properties. But if you inherited land or a property, make sure you include this in your application process as it can actually help your rate go down.
Banks want to see that you have a pristine history of paying rent. You’ll need to supply your bank with all of your residential information and how much you paid month-to-month over the past few years.
3. Choose The Best Fit
Not all lenders are created equal.
Find a well-qualified loan officer that has your best interest at heart. There are many different types of mortgages and programs that can greatly assist you.
Depending on your field of work, there may be credit unions that exist to help people in your career field to obtain certain types of loans.
Are you an actor? There’s a credit union that is there to assist you with your first loan. They understand that your W2’s may be less consistent and that your employer may be consistently changing. Find a fantastic lender in your area that is customized to you.
Choose a lender that offers you a low rate, but also comes through in customer service. If possible, shoot for a 15-year loan instead of a 30. While you will pay more monthly, you will save big time in interest in the long run.
4. Check In On Your Credit
Credit is everything when filling out a mortgage application.
If your credit score is low, perhaps wait for a few years until your past mistakes fall off your history. The better your score, the better the rate and chances of getting approved are.
A FICO score is an important part of a mortgage loan. There is no better time than now to start monitoring your credit scores if you aren’t already. Creditworthiness can seal the deal when it comes to getting a great loan.
Some lenders will even offer you a discount for having a great FICO score.
5. Check Their Policy
So, you think that you’ll start with a 30-year loan for now and then start paying it off by doubling your monthly payment once you’re comfortable again?
If so, you may need to think again.
Not all lenders allow pre-payment as an option.
Some lenders will actually penalize you for paying the mortgage off early. Remember that lenders make money off of lengthy loan agreements and high-interest rates. By cutting down the amount you owe them, the less money they will make.
Find a lender that absolutely allows pre-payments who don’t fine you for being smart.
Enjoy The Ride
Filling out your first mortgage application should be an exciting time. Don’t let the stresses of timelines, documents, penalties and harsh lenders put you off.
Finding the best fit by considering all aspects of your finances can make all of the difference. Crunch your numbers and see if you can put a little bit more on a down payment and still remain comfortable. Consider all of the taxes that will be required on your property, and keep an eye on your credit score as you move forward.
Find lenders with great policies for paying off your loan early, and make sure and get the best rate possible. And remember- a 15-year loan is a good thing!
When you’re ready for a low rate and assistance with your mortgage application from people who want what’s best for you, click here!