September is National Mortgage Professionals Month. At Academy Bank, we’re proud to serve our community by offering a variety of mortgage options in order to help you and your family purchase a home. But getting a mortgage can feel intimidating, so we’re here to help make the mortgage process go as smoothly as possible.
Here are our top six tips.
1. Get Familiar With the Process
If you’ve never bought a house before, looking at the process with a 30,000-ft view can feel overwhelming. Even for those who have bought a house before, not many people will tell you that they love the homebuying process.
But you can make it easier for yourself by becoming familiar with the process and looking at the steps in order. Taking it in smaller pieces can make it feel more manageable.
While the steps may vary based on your own personal situation, here is what you can generally expect:
- You apply for the loan and submit the necessary documentation.
- Your loan is created with your lender during the mortgage origination process.
- An underwriter will review your submitted documents and check for any risks based on your financial history.
- Your loan will be approved or denied. In some cases, it may be contingent on you meeting certain requirements.
- Finally, you’ll close on the home. This final signing of paperwork generally takes place at your lender’s office, the title company’s office, or an attorney’s office.
2. Plan Your Budget
Budgets are important -- and this is particularly true when it comes to making a major purchase such as a home. While you may have already decided how much you’re willing to spend on your home, you may be surprised about how other fees and costs during the mortgage process can add up.
These are often referred to as closing costs. Typical closing costs include: the loan application fee, title and/or attorney fees, escrow fees, mortgage origination charge, courier fees, and more.
According to data by ClosingCorp, on average, Americans paid approximately $5,749 in closing costs in 2019, including taxes. So be sure to factor these additional costs into your budget.
3. Be Prepared With Your Paperwork
After you submit your loan application, your lender will come back to you and ask for supporting documentation. This includes information on your finances, such as bank statements, paystubs, proof of assets, and more. You also may need to send a copy of your photo ID.
It can take quite a bit of time to track down all these documents. Getting started with gathering it all as early as possible can help it feel like less of a scramble when the time comes. It may even be in your best interest to gather all of the necessary paperwork before you even submit your initial loan application. That way, you know you’ll be ready.
4. Keep An Eye On Your Credit
In the time leading up to your mortgage application, you’ll want to ensure that you keep your credit score as high as you can. The better your credit score, the better interest rates you may be eligible for.
Also, keep in mind that surprises are rarely good when it comes to your finances.
That means you’ll want to make sure you are paying attention to your credit report. You can request a free copy of your credit report from each of the three main credit bureaus -- Equifax, Experian, and TransUnion -- once per year. As a result of the COVID-19 pandemic, you can even request a free report each week through April 2022.
If you notice errors or fraudulent charges, be sure to get them cleared up as soon as you can before submitting your application for your loan. That can help make the approval process go more smoothly.
5. Make Good Financial Decisions
When looking at your application, lenders won’t only consider your credit score. They’ll also be looking at something called your debt-to-income ratio, or your DTI. If your debt-to-income ratio is too high, you might not be approved for the mortgage.
Working to pay down debts before applying for your mortgage can help you feel more confident about getting approved.
Also, be careful about making any big purchases around the same time you’re applying for a mortgage. Whether it’s a car, a boat, or something else, you want to make sure it doesn’t impact your financial picture in the eyes of your lender -- or contribute to a higher DTI.
6. Communicate With Your Lender
When it comes to any relationship in life, keeping the channels of communication open between the two parties can make things go much more smoothly. The same is true of the relationship you’re entering into with your lender.
Your lender is there to help facilitate your mortgage process, so be sure to respond in a timely manner if they contact you with requests for additional information or supporting documents. Having a good relationship with your lender can help you feel more at-ease during a sometimes-intimidating process.
With that being said, be sure you choose a lender that not only meets your financial needs, but that you feel confident will support you throughout the process.
Academy Bank Will Walk You Through It
Even when it feels difficult or confusing, Academy Bank is committed to being by your side throughout the mortgage process. We offer a variety of loans -- and be sure to ask us about our $1,000* closing guarantee.
Member FDIC
Subject to credit approval