A home is likely one of the biggest purchases you will make in your lifetime. Because of this, the home-buying process can be an exciting, emotional and potentially stressful time. Although you can’t plan for every potential bump in the road, you can take several important steps to help your mortgage loan process run smoothly, helping to land you in the home of your dreams.
Shelley McLerren and Rey Topete, senior processing managers with PNC Bank, offer four key pieces of advice for home buyers:
“Before you start looking at homes, contact a loan officer at your bank to talk about your income, savings and expenses,” says Topete. “Your loan officer can help you get an idea of the value of the property you qualify for. This is a great step toward making sure your income and down payment are aligned with the homes you tour.”
McLerren adds, “At this time, your loan officer also can share details about different programs you might qualify for, such as first-time homebuyer programs, neighborhood housing grants or Veterans Affairs products.”
Once you meet with your loan officer and receive a pre-approval, you can start looking at homes. When you find one you like, the pre-approval letter shows sellers that you’re serious about the purchase and are likely to be formally approved for a mortgage within the price range outlined.
You might be hesitant to fully disclose your full financial profile to your loan officer, but sharing this information at the beginning of the process is the best way to ensure your mortgage works for you. “Being honest and clear at the start helps your loan officer help you,” Topete says.
If you didn’t provide documents to verify your finances during the pre-approval process, gather them now. Be prepared to share the following documents with your loan officer:
“Make sure the documentation is complete and submitted on time,” McLerren says. “Don’t leave out blank pages. If the document says it is four pages long, provide all four pages, even if the last page doesn’t contain financial information.” Failing to share complete documentation can cause unnecessary delays in the time-sensitive mortgage process.
If you have received any gift money from family or friends to help you buy a home, be prepared to document it. “This is where buyers are at the greatest risk for delays. It can take some time to coordinate this information with all the parties involved,” says Topete.
Tell your loan officer right away if you will be using gift money to help you buy the home. Your loan officer will give you gift letters to be signed by each person who gave you money. For large gifts, the giver may be asked to explain their contribution or share bank statements. Asking family and friends to share their bank statements might feel uncomfortable, but it’s for a good reason. “Your loan officer needs this information to make sure that ‘gift’ isn’t actually a loan that you’re obligated to pay back,” McLerren explains. “This protects you from getting in over your head financially, but it also protects your lender against fraud where sellers could lend you money to influence your approval.”
If you recently got married, don’t worry about tracking down every guest who gave you money as a wedding present. Instead, try to deposit all of your wedding funds at one time. Your loan officer can verify the timing of the deposit with your marriage certificate or can cross-reference your bank statement with copies of the checks that add up to the total amount of your cash wedding gifts.
“After you’ve been approved, you might be tempted to shop for furniture for your new home. Check with your loan officer first,” McLerren recommends. “Spending large sums of money could cause you to no longer qualify for the mortgage if that spending changes your debt ratio.” For example, if you were approved for a mortgage with $15,000 in savings not being used for your home purchase, your loan officer will want to see that money stay there until you close on the house.
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