By Jacob Koerselman, Mortgage Loan Underwriter Officer, NMLS# 768443 & Cindy Van Regenmorter, Senior Mortgage Loan Officer, NMLS# 441579
The fresh spring air brings out many potential homebuyers.
The mortgage industry has experienced many changes over the last decade, but the basic concepts are relatively the same. Here are some helpful tips if you plan to apply for a mortgage loan.
1. Get prequalified.
Before you go shopping for your dream house, you should determine how much you can afford to borrow. Stop by any Peoples Bank location, and a Mortgage Loan Expert
can assist you with this process. All lenders are equipped to help you determine the price range you can afford and provide you with a prequalification letter.
2. Stick to your budget.
Shopping for a home is exciting! Be careful that the excitement doesn’t take you outside of your comfort level for a house payment. The costs of owning a home can include more than the loan to purchase the residence. That’s why it helps to leave a comfortable margin. We want homeownership to be a great experience in which you have a comfortable monthly house payment that your budget.
3. Cash is still king.
A down payment is not necessarily needed for every transaction, but the more savings you have, the more options you’ll have available to you as a potential homebuyer. Although your down payment is not the only item reviewed when qualifying for a loan, the more cash you have, the more likely your loan will be approved. If you don’t have cash, gift funds are accepted if they come from a qualified source. In most cases, all family members are acceptable.
4. Know your credit.
Your past credit history is a major indicator of how you will perform on new debt. A great credit history will get rewarded with the lowest rates in the market, while marginal credit histories may see slightly higher rates. It is wise to check your credit history and score ahead of purchasing a home, just in case an issue or mistake on your credit report needs to be corrected or repaired. Generally, such a request could take time, and we would hate to push back timelines that have already been set for a home purchase. Another good practice is to pause any new credit applications or borrowing activity. Banks will qualify borrowers with the numbers and figures they have in front of them at the time of the application. If new debt or payments are added, it could affect the approval of a loan. Always keep your Loan Officer in the loop if you are contemplating applying for other debt.
5. Prepare your income documentation.
Most Lenders will request income documentation at some point during the mortgage application process. It’s helpful to have it ready and available. Generally, most lenders will request two years of tax returns, two years of W-2’s, 30 days of the most recent paystubs, and two months of bank statements. Other requests may occur depending on the borrower’s situation. By having this information available, it will simplify and speed up the prequalification process.
6. Free Money
Who doesn’t like free money?! Most lenders have grant programs they can offer to homebuyers. Most will need to fall under first-time homebuyer requirements and income thresholds, but it doesn’t hurt to ask. Peoples Bank also offers a Mortgage Credit Certificate, which is a huge advantage come tax time. Call a Peoples Bank Mortgage Expert
to get more details.
7. Ask Questions if you have them!
The mortgage industry has overhauled its rules multiple times over the past few years. Documents have changed; programs have changed; and requirements have changed. It has become quite an extensive process. From origination to closing, it could be a couple of weeks. Don’t let that scare you. The Mortgage Loan Experts
at Peoples Bank are here to answer any questions that you may have. Don’t be afraid to ask!
Peoples Bank is here to help!
At Peoples Bank, we understand that the homebuying process can be daunting. Our team of experienced lenders is happy to answer any questions you might have about buying a home. As your hometown bank, we’re dedicated to our communities and look forward to helping you achieve your dreams of home ownership. Stop by one of our nine convenient locations
, apply for your mortgage online
, or contact us