The mortgage process can be confusing with multiple twists and turns to navigate. But it doesn’t need to be intimidating. With a Guardian Mortgage professional on your team, you will have an advocate helping guide you every step of the way.
Whether you are just starting to think about buying a new home or actively searching, we are here to help with your home buying journey. Konni Williams, a member of Jen Guidry’s team in San Antonio, recently shared her list of the top Dos and Don’ts for avoiding common mortgage mistakes.
These tips will save you time, stress, and potential heartache as you go through the home buying process. By keeping them in mind, you’ll be better positioned to get a home mortgage loan and purchase your new home quickly.
The Mortgage Process 101
The first step to avoiding mortgage mistakes is understanding the mortgage process. There are typically seven steps to the mortgage loan process. These steps include:
- Pre-Approval: Before searching for a home, it is advisable to get pre-approved for your home mortgage. This shows sellers that you are a serious buyer, which gives you an advantage in a competitive housing market. It also gives you peace of mind that you can afford the type of homes you’re looking at.
- Loan Option Review and Selection: Your mortgage company will look at your income, assets, and credit history to verify your ability to pay back a loan. Once approved, your loan originator will present you with loan options, including conventional loans, VA loans, FHA loans, and other loan types for which you may qualify. They will also provide you with options for your payoff time frame. These are typically 30-, 20- and 15-year time periods. Once you have found the best loan for you, your loan professional will lock in your mortgage interest rate.
- Loan Processing: When processing your loan, your loan originator will verify employment, order a residential appraisal to confirm home value, and request title work from the title company. They will also collect additional documentation and insurance paperwork.
- Underwriting: At this stage, the mortgage company uses a variety of collected information to determine if the loan presents an acceptable level of risk. The answer may be, yes, no, or we need more information.
- Closing Documentation: At this point, your loan file goes through a pre-closing review for quality assurance. In this step, your loan team makes sure everything is in order for your final loan closing.
- Loan Closing: You’re there! During this step, you’ll meet with your loan originator and a member of the title company to review and sign loan documents and pay any closing costs. Additional funds will also transfer to the title company.
- Loan Servicing: Your mortgage company will take care of the administrative aspects of your loan while you pay your mortgage payments.
Now that you better understand the mortgage process, let’s work to avoid common mortgage mistakes that take place during the mortgage lending journey. Konni suggests the following Dos for an easier loan process.
Dos For Avoiding Common Mortgage Mistakes
- Do have your finances in order.
Make sure your documentation is thorough, accurate and complete to give your loan team everything they need to serve you. Paperwork varies based on your mortgage lender, but typically includes:
- Loan application
- Financial verification documents: W2, pay stubs, tax returns, alimony, or child support documents
- Assets and debts documentation: bank statements, investment accounts, credit report
- Do respond as quickly as possible.
Try to be as responsive as possible when working with your loan team. If you can respond within 24 hours, your team will be better able to keep moving forward and get your loan closed in a timely fashion. The longer you wait to respond, the more time your team spends waiting to work!
- Maintain your current employment throughout the loan process.
If you’re looking to make a career change, wait to move on to your next gig until after your loan has closed. Your employment, and the income it brings, play a large role in the mortgage process. Changes in your employment, especially during loan approval and closing can impact your loan’s closing timeline and even your ability to close. Of course, keeping your current employment throughout the loan process is not always in your control. Notify your loan team of any changes to your employment promptly.
- Do ask questions.
This is perhaps the most important do of all! Throughout the process, your Guardian Mortgage loan originator will do his or her best to make everything clear. Our goal is to ensure you feel 100 percent comfortable with your loan and fully informed about the process. However, if anything is not clear do not hesitate to ask your team questions. We’re here to help.
Now that we’ve covered the dos for getting a mortgage, let’s look at some common mistakes and how you can avoid them.
Don’ts for Avoiding Common Mortgage Mistakes
- Don’t wait until you find the perfect house to apply.
Apply for pre-qualification when you know you’re ready to start looking, instead of when you’re “finished” looking. You’ll be better positioned with the seller and avoid potential heartbreak when you are preapproved for the type/price of home you are looking for. If you don’t go through the preapproval process, you’ll be behind and may miss out on that house you fell in love with.
- Don’t submit incomplete documents or photos of documents.
Time is of the essence in the current housing market. Don’t let incomplete documents slow your loan process down. Take time to ensure everything is in order before sending your documents to your loan originator. Likewise, make sure you’re giving your loan originator the forms of documents they need to complete the process. For example, photos of documents are typically unusable.
- Don’t make large cash deposits or give any large gifts without first talking to your loan originator. Your loan team needs a paper trail of all transactions to show why your bank accounts are fluctuating. Their goal is to ensure your income is coming from legitimate sources and that you’ll be able to pay off your mortgage debts. So, a large change in your finances, either plus or minus, could throw a red flag. For more information, read the Realty Times article on cash deposits when applying for a mortgage.
- Don’t apply for other forms of credit before, during or shortly after your loan process. Multiple credit inquiries in the same time period could harm your credit score and cost you money. If you can avoid double-dipping on mortgage and credit card inquiries, you’ll potentially save thousands of dollars.
- Don’t pay attention to marketing calls offering mortgage “deals.” An unfortunate reality of running your credit score is that it triggers a barrage of calls from companies looking to sell you a mortgage or worse, steal your information. Don’t let these calls shake you. Know they will come and know to ignore them.
While some of the details behind the Guidry team’s advice are specific to them, the general principles remain wise practices for those seeking a loan. To hear Konni discuss her list of Dos and Don’ts in her own words, watch her video(Opens in a new window) here.
Shopping for your next home can be both exhilarating and frustrating. This is even more relevant in the challenging market of the present time.. Remember, knowledge is power. Follow these tips on the top Dos and Don’ts for avoiding common mortgage mistakes and educate yourself on every part of the home buying process for a smoother journey.
For more information on the mortgage application process, contact a Guardian Mortgage professional today.CONTACT A LOAN EXPERT