Tips for Making the Mortgage Application Process Easier

If you're preparing to buy your first home, you're probably not very familiar with the mortgage process. When you go in to get pre-approved or to apply for a loan, you may be surprised at the amount of paperwork and information needed. Additionally, you may also not be clear on the amount of down payment required or any other issues that can come up with a mortgage. These tips will help you be more prepared for applying for a mortgage and for avoiding some of the pitfalls that many first-time homebuyers run in to.

Check Your Credit Report

Now that many credit card companies are offering cardholders their credit score for free every month, you may start relying on that instead of pulling your credit report. Unfortunately, while the score your credit card offers you is usually accurate, it doesn't include your credit history. Your lender will pull your full history and carefully read over it to determine your debt and your history as a borrower. Anything that looks off can delay or even deny your mortgage.

Even if you think you know everything that's on your credit report, it's always a good idea to request a copy from one of the free sources before applying for a mortgage loan. In fact, experts suggest you make use of the opportunity to pull your credit report for free once a year. This lets you see exactly what's impacting your credit score and to keep an eye out for identity theft. The last thing you want is to be denied for a mortgage due to debts someone else racked up under your name. Looking at your report prior to applying also gives you the chance to clear up any errors before you go in to meet with a lender.

Look at Your Finances

Another good thing to do before applying for a mortgage is to review your finances. This is helpful for a couple of reasons. First, it reminds you of your monthly expenses. Seeing these expenses written out allows you really think about how much of a mortgage payment you can afford. If you do the math and see that a mortgage is going to put stress on your finances, you may need to rethink your plans.

Second, reviewing your savings and other assets will let you determine how much of a down payment you can make. Traditionally, you need about 3 to 5% of the purchase price as your down payment on a FHA loan and 10 to 20% on conventional. Some loans, such as a VA loan, don't require any down payment at all.

If you can't afford your down payment, you may want to either delay purchasing a home or find additional sources of cash. For example, a family member may be able to "gift" you your down payment, or you could possibly tap into your retirement account.

Have the Right Paperwork on Hand

Nothing can be as frustrating as being ready to close on your home, only for the lender to come back because they don't have all of the paperwork they need. When you go in to get pre-qualified or to apply for a mortgage, you'll be asked to provide a number of different pieces of information. You'll need to have proof of income for yourself and any co-applicant, including your spouse. Usually, that means having your W2 and at least two years of tax returns. If you've recently changed employers, you'll need to have the W2 from your previous job, too.

You'll also need several months' worth of bank statements to show that your monthly income is sufficient to afford a mortgage. If you're borrowing money from your retirement account, or if a family member is giving you a cash gift to help with the down payment, you will need to have them write and sign a letter saying as much.

There are a number of other documents you may need to provide. If you own your own business, for example, the lender may want to see profit and loss statements. You'll also need to supply paperwork if you receive alimony, have declared bankruptcy in recent years, or if you have additional income. Always ask the lender what paperwork you'll need prior to your appointment with them.

Talk to Your Agent

Your real estate agent will help you with a referral to a reputable mortgage lender, and any paperwork you need to provide regarding the purchase of a property. If you're going in to be pre-approved, you won't need anything from your agent (in fact, you can get pre-approved before you even hire a real estate agent).

Once you have your pre-approval in hand and are ready to start searching for a home, if you haven't done so already, you can start looking for the best real estate agent to represent you. For those in the LGBTQ community, that may mean finding a gay or lesbian real estate agent. Often, these agents will better understand your needs and have more insight into the types of homes and the neighborhoods you're looking for. The top real estate agents at www.GayRealEstate.com have been representing members of the LGBTQ community with home purchases since 1991! Offering free buyers representation.