Congratulations, you’re ready to make one of the biggest purchases of your life by buying a home. For most people, the exciting process of obtaining the keys to your own house starts with applying for a home loan.
While it can seem like a daunting task to a first-time homebuyer, applying for a home loan doesn’t have to be scary. Your Local Home Loan Experts at UnitedOne Credit Union are here to help you through every step and answer all of your questions.
Listen to UnitedOne’s Mortgage Specialists discuss this topic in the latest episode of their podcast, At Home on the Lakeshore.
Below are some insights from your Local Home Loan Experts to give you an idea of what to expect when applying for a home loan.
“The best thing to do is to get pre-approved to start with,” said UnitedOne Mortgage Specialist Kari Johnsrud, NMLS # 441414. “It’s always good to talk with someone before you start looking at houses to see what you can afford, and we can run you through that process and get you a pre-approval letter.”
Be prepared to submit these items when applying for a home loan:
- A current photo ID
- Current pay stubs
- Your W2's and tax returns for the past two years
- Bank statements for the past two months
- Investment account statements for the past two months
- Retirement account statements for the past two months
The main thing potential homebuyers should have, however, is patience because the process of buying a home takes time.
The average home loan will take about 30-45 days, from putting in an offer to closing, according to Johnsrud. The length depends on the type of loan being done and if elements like an appraisal or inspection are being completed as well.
“There are going to be so many questions and you might feel like, ‘Oh my gosh. This person wants to know everything about me,’ said UnitedOne Mortgage Specialist Linda Serrano, # 441416. “It’s not that we are prying because we’re not, but it’s what is being asked for on the mortgage. A mortgage is a very highly regulated product, and we have to know all of these things to be able to get you what you really want.”
It’s crucial to assess your financial situation before applying for a home loan. Reviewing your credit report is a good thing to do because a higher credit score typically leads to better loan terms.
Your Local Home Loan Experts at UnitedOne will go over your credit report when you apply for a home loan, as your credit report from the three major bureaus will be pulled to (TransUnion®, Experian®, and Equifax®) to help determine your debt-to-income ratio.
“Sometimes we’re making you aware of things that are on your credit report. We go through it line by line,” said UnitedOne Mortgage Specialist Julie Peot, # 441412.
“I always tell new buyers, we love paper. Even though we’re in an electronic world, a more and more paperless world. We love paper. We’re going ask for a paper trail on everything.”
Having documentation of large deposits and transactions is essential when applying for a home loan. It’s also vital to communicate any potential changes that could affect your debt-to-income ratio before closing. It’s best to avoid any new debts during the home loan process, like buying a car or applying for a credit card.
“If there are any large deposits, we have to paper trail where that money came from,” Johnsrud said. “So, if you sell a motorcycle, keep a paper trail of the process, like a signed bill of sale or a copy of the check, things like that, so we can show the underwriter that’s where the money came from.
“If you are going to change jobs let us know. We get surprises more often than you’d think.
We do verification of employment within 10 days of closing, and you wouldn’t think it would matter sometimes if you are just going from one job to another. But keep in mind the underwriter is going to want to see at least one full pay stub from that new job usually before we can sign papers. Let us know about everything no matter how small you think it is.”
Remember, your Local Home Loan Experts are here to walk you through each step of the home loan process, including helping you decide on the right mortgage product to fit your needs.
Even if you don’t feel like buying a home is something that is in the cards for you right now, UnitedOne’s Mortgage Specialists can walk you through the steps you need to take to improve your credit score so you can obtain the home loan you want in the future. Taking that first step doesn’t have to be scary.
“You as the consumer, you don’t know what you don’t know,” Serrano said. “That’s really what I tell the membership when they come in to see me. They are like I don’t know if I can get approved. I always say you don’t know what you don’t know until we take the application and go through the whole process.”
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