Mortgage Broker: Don’t Make These Application Mistakes!
ou are planning to buy a property, you are probably aware that getting your funding squared away is the most important part of this complex process. Before starting to shop for a house, you have to get a price range and the pre-approval sorted out with your mortgage broker.
We are aware that the process of obtaining a mortgage can be confusing, but it’s essential to understand the steps along the way to obtaining a mortgage.
We have made a list with the errors that could cause delays in the approval process. Try to prepare as best as you can and try avoiding these common mistakes:
1. Confusing approval with pre-approval
One of the most misunderstood terms in the mortgage process is the difference between being pre-approved and approved.
A mortgage pre-approval is based on the results that the mortgage representative receives ones he receives the signed mortgage application and processes it through an automated underwriting system. An extensive check on your financial background and current credit rating will be performed. In case you meet the lender's guidelines, the representative issues a mortgage loan pre-approval. You will receive a letter from your lender stating the specific loan amount, rate hold and loan type that you could get. This letter has to be submitted with your purchase offer as proof of your ability to pay for the property.
2. Excluding details of your financial profile
The mortgage broker/ mortgage lender will start reviewing your application; he will need you to be honest about your finances in order to accurately determine the amount that you can afford and how much of a risk you may be to default on the loan. Your mortgage broker might request the following information: basic personal and contact information, tax returns, W2s, bank statements, history of current & past employer names and addresses, and your current landlord’s information. They will review your basic personal and contact information, employment and residence history, income, assets and debts or obligations on your credit report.
3. Not providing every single piece of documentation
To help you land your dream home you will need to provide a long list of documents. This information is required in order to provide you the loan with the best available terms. In case you forget any of the required paperwork, you risk delaying your own mortgage approval.
You should be upfront with your mortgage broker and provide him/her detailed documentation such as:
- Driver's License with Social Security Cards
- Latest 2 years tax returns
- W-2s for the most recent 2 years
- Pay stubs for the last 30 days
- Two months of statements for all asset accounts
- Year-to-date business financial statements , CPA letter and/or business license if self-employed
- Explanations and paper trails for all withdrawals and deposits of $1,000 or more
- Gift letter for down payment (if this is the case)
- A home insurance quote that meets the lender’s requirements for coverage
- Preliminary Title Report
- Signed Disclosures so a credit report may be pulled
The mortgage lender will check your income directly with current and past employers and will run a hard inquiry on your credit to pull your FICO score. The mortgage broker will require you to explain and document or any missing piece of documentation.
4. Not sharing home offer details with the mortgage lender
Usually this task is done by your agent; still you should follow up and make sure that your realtor and lender work together. The lender will be providing your real estate agent certain details that have to be inserted into the final contract; one such info would be the number of days to secure the loan approval or to close. Wrongly filling this data could make you lose the initial deposit on the home.
5. Being unrealistic or uninformed about rates
As soon as the seller accepts your offer, you can lock your rate; this will guarantee you a specific combination of interest rate and points and you will be protected from rate fluctuations no matter the market movement.
If you decide that a floating rate would is the best choice for you in today's market, take into account that this will be set at the prevailing rate before your scheduled closing date.
According to Bankrate.com
mortgage rates were 4.5% for a 30-year fixed, 3.51% for a 15-year fixed, and 3.3% for the first five years on a 5/1 adjustable rate mortgage (ARM)
A mortgage broker can help you find a mortgage suited to your specific needs. You can apply for a mortgage through a mortgage broker we can help you compare the mortgage options available to you. From pre-approval to closing, Casey Moseman, your Las Vegas mortgage broker will work with you throughout the entire process.
Remember that even if it may be tempting you do not have to borrow the maximum amount you qualify for, particularly if the payment amount would be above your own comfort level. It is important to choose both a house as well as a mortgage that suit your needs.