Given today’s economic condition and the situation of the housing market, now is a great time to buy a home. Over and over, we hear “It’s a buyer’s market.” This means that choosing to buy your first home now would not only be a great investment, but it’s more likely that you’ll see lower rates on your mortgage as well as the cost of your house. Although the prices of many homes are going down, this is an advantage to buyers who will see the house increase in value as the market improves.
One of the most important decisions you will make after deciding to purchase your home is choosing your lender. This is a big decision. After all, it’s likely to be the largest amount you will personally borrow from the bank and 30 years is an awful long time to have a bad relationship. Choosing your lender through research and personal testimony is your way of doing your homework about the loan you are about to apply for. Make sure to look at the bank’s website and take time to sit with a professional who works at that institution so you can get an idea of how customers are treated and the financial soundness of the establishment.
The mortgage lending process is heavy in paperwork. In most cases, lenders like to see where you have been and what you have been doing for the last two years. When gathering documents for your mortgage application, make sure that you provide information for at least 2 years. Knowing what documents he/she will be asking for can help to speed up the application and approval process. Here is a list of things your mortgage representative will likely require:
-Address and telephone numbers of each borrower
-Previous address if less than two years at current address
-Social Security number of applicant(s)
-Employment/Income for two years
-Name and address of employer(s) for the past two years
-Pay stub(s) for the last 30 days showing year-to-date and current period earnings. If you have additional income, you may need documentation for accuracy
-Checking and savings account statements for the past two or three months.
Other things to look at when researching lenders are application fees and discounts. If you have your checking account with a particular institution, they may give a discount for choosing to hold your mortgage with them. Also, some lenders give discounts because of the company you work for or the average amount of funds you hold in your account. Ask your chosen lender if there are any discounts you could receive for holding your mortgage with them. Interest points can prove to be the most important discount because it decreases the amount of interest you will pay over the life of the loan.
Although you have already started looking at homes, it is not necessary to have found your perfect house before applying for a mortgage. Most times, applications will stay in the system for 30, 60 or even 90 days. Choosing a lender is basically a pre-approval that will help support your bid for the home. In today’s market, many sellers require a pre-approval to be submitted with your bid so they know they have a financially stable bidder.
Above all else, have patience. Applying for a mortgage can take a few days and up to a few weeks.
Remember, you are going to be dealing with this financial institution for 15 to 30 years and the sum of the cash you’re borrowing is nothing to be taken lightly. Ask a lot of questions, and give your mortgage lender ample time to respond. Good luck!