If you’re getting ready to buy a house or refinance your home, you might be overwhelmed by all the advice you’re getting from friends, family, and coworkers. It seems like everyone who’s already been through these processes has a story or a warning they want to share, making everything more intimidating.
The homebuying and mortgage processes can be complicated., and In trying to understand them, people sometimes mistakenly trust advice that’s dated or incorrect.. We’re here to make sense of some topics that are commonly misunderstood, so you can make informed choices about getting a mortgage.
Myth #1: If I refinance with the same company that services my loan, I won’t have to provide documentation again.
Even if you just bought your home a few years ago, many factors – including your own financial circumstances – could have changed. While you might not need to provide quite as much documentation, you will still need to supply your lender with:
- Proof of income
- Insurance information
- Credit verification
- Statements of debt and statements of assets
You may or may not need an appraisal. You may receive a property inspection waiver. If you need an appraisal, your lender will order it and it is not time consuming or difficult. After the appraisal, the appraiser will report their findings back to your lender to assure them of your home’s value.
Myth #2: Everyone qualifies for low rates right now.
Even with rates that are generally favorable right now, getting a low mortgage rate depends on you and your finances. Factors include your:
If any of those items aren’t favorable, you might not qualify for what you’d consider a low rate. If you have several months before you plan to apply for a mortgage, you can work on improving your credit score and debt-to-income ratio – but it’s not usually a quick fix.
If you’re ready to apply now, make sure you’re engaged with an experienced lender who will work to get you the best possible rate.
Myth #3: Getting a mortgage today is easy
Even though most lenders strive to simplify the mortgageprocess, it is still a complex process. There are a lot of people, paperwork, and procedures involved., and It can be stressful making sure everything goes well.
One way to prepare is to make sure you’re not scrambling for documents your lender will want. Gather these items ahead of time. This can prevent potential disruptions or delays in your mortgage application. Common documents a lender will need to process your loan are:
- Two most recent pay stubs for each borrower that reflect at least 30 days of year-to-date earnings
- Most recent W2 for each borrower
- Most recent bank statements (all pages) from whichever account will be used to pay your down payment and costs at closing
- Additional asset account statements (checking accounts, saving accounts, mutual funds, stock accounts, retirement accounts)
- Gift letter, if a portion of your down payment or closing costs will be paid via a gift
Depending on your personal finances and situation, your lender might need other documents, like bankruptcy discharge information, child support documentation, or a divorce decree. Getting these ready will be a good start to help you tackle this exciting, but complicated, process.
Start off on the right track with proper prep work
No matter your financial position, there will be stressful moments as you seek a mortgage – but understanding what you’re getting into ahead of time will help smooth out many of the potential bumps.
To learn more about the mortgage process, take a look at our guide, Steps of Your Home Loan Process, and our loan options. Then connect with one of our loan originators to get started on your mortgage or refinance – we’re here to help.CONTACT A LOAN EXPERT