Let’s be honest here. Buying a home, be it a condo, a townhome, or a single-family home, is one of the most complex financial processes the average American will partake in during their lifetime. Not only is it complex, but it requires a great deal of teamwork to make it all work. There are lenders and mortgage professionals out there spouting about their simple process, their app-based process, their cookie-cutter process.
Don’t believe a word. Don’t believe the commercial on TV. Don’t believe the web banner ad. Don’t believe what you hear on the radio or in print or from anyone who represents these ‘simplified’ mortgage processes. This process is not, and, most likely, will never be a simple process. Let’s do a run-through, shall we?
For this discussion, I’m going to leave out the real estate aspects of the process and focus only on the mortgage loan application, qualification, and approval process.
You must have your credit pulled and this hard pull will have an effect on your credit score. It can have a huge negative effect on your score if you are denied a mortgage for credit purposes. As such it’s always good to have an idea as to where your credit stands. This, general, information can be obtained via a credit card score report, a credit score app, or a website like Credit Karma, or by contacting the credit bureaus and obtaining your credit report directly, which you can do once a year at no cost. These scores will rarely be accurate in regards to the mortgage scoring system used by mortgage lenders. Be prepared to be surprised at where your score comes in at. An honest and transparent lender should help guide and educate you along these lines.
You must provide verification of employment, yes your employer will be contacted, and if you don’t want your employer to know you are buying a home then you should stop before you start. Lenders have to verify your employment history, going back a minimum of two years. Prepare to be asked for your previous employers’ contact information and, possibly, for previous, or your current, employer to reach out to you to make sure the request is valid.
You must provide two years of residential history. You will need to provide contact information to verify your residential history as well. This can be mom and dad, landlords from previous rentals, or the leasing companies of previous rentals.
And then there’s the documentation. Thirty days of pay stubs, 60 days of bank statements, most recent retirement, investment, 401k, or pension statements. Copies of your drivers’ licenses. Two years of W2’s and/or 1099’s depending on how you get paid. And if you are self-employed be prepared to provide balance sheets, profit and loss statements, Schedule C’s, K1’s, and, probably, your complete tax returns. As well as CPA/Accountant contact for the verification of employment.
Finally, the number of actual human people involved, no matter the lender, no matter the app, no matter the ‘easy one click’ mortgage or ‘simple’ loan process, the number of eyes that will work on your mortgage is nowhere close to the automated zero some lenders would have you believe. In addition to a loan officer, or loan originator, there might, and probably will be, a processor, underwriter, loan assistant, appraiser, appraisal management company, title rep, escrow officer, insurance agent, quality assurance review, auditor, branch manager, etc…
With all of these people, processes, and documentation involved and required, the mortgage loan process can be very complicated. To make the process feel simpler requires a personal touch that only a professionally licensed loan officer can provide. The relationship and high touch approach CAN and WILL make a complex process seem easier than it is, but no bank or lender has a patent or appropriate training to teach customer service and personality.
Find someone you trust and get a referral to an experienced loan officer. You will not regret it.
If you are looking for just such a lending partner don’t hesitate to reach out to me via this form!