Applying for a mortgage can be a very time-consuming and exhausting process, but it doesn’t necessarily have to be. Understanding the loan application process - and being prepared for it both mentally and in terms of paperwork – can help make financing your home a much smoother process. Here’s what you need to know.

• In today’s economic climate, lenders are still nervous about extending credit to new borrowers. Expect to bare your entire financial life to prospective lenders—they’ll want to know everything about your income streams, your debt, your assets and your liabilities.

 

• Don’t be surprised when they question the small stuff, like the source of small deposits, or the purpose behind transfers from one account to another. Remember: banks are being conservative, and they want to be reassured. Just answer these questions honestly and in a timely manner, and all will likely be fine.

 

• Stay organized! Keep a folder handy with all of the important documents you’ll need to provide with your loan application. These include prior years’ tax returns, recent paystubs, prior years’ W-2 statements, bank statements, and statements for other asset accounts.

 

• Keep organized digitally, too. Many lenders have gone digital in their submission process for documents, so you’ll need to keep your digital files organized. These include scans of paperwork that you send along with your application, as well as copies of digi-signed documents.

 

• Stay on top of things. If you’re working with your lender and are in escrow on a home, you need to stay on top of your loan application to make sure that things are progressing well enough to close on time. This means calling your lending agent frequently to ensure that there are no snags, and providing any missing paperwork or supplying any details they need as soon as possible.

 

• Read everything. The numbers on things such as Fee Disclosure sheets and Good Faith Estimates are extremely important—so you should read through them carefully and note any questions or issues you may have. Be sure that the math on each sheet is correct, and that the costs on your final loan docs fall reasonably in line with these early estimates. Remember: your lender may be a big institution, but your loan is being prepared by a person, and people make mistakes. Double-check and question everything!

See Also:
Loan Application Checklist
How much home can you afford?