1. Organize your documents
Here is the typical documentation we will need to gather after you make application to process your loan request:
- Copy of Purchase Sales contract or Offer to Purchase and all addenda (signed by buyer and seller)
- Previous 2 years’ tax returns and W-2s
- Previous 2 years’ employment history
- Last 3 consecutive paycheck stubs (5 if paid weekly)
- Name, address, and phone for past 2 years’ residences and landlords. Renters need proof of 12 months’ rent payments.
- Last 3 months’ statements for savings, checking, CD, money market accounts, etc.
- Recent statement on retirement accounts (IRA, 401K, 403-B, Annuity, etc.)
- For all open accounts, monthly payments and balances
- If applicable, divorce decree
- If applicable, bankruptcy schedules/discharge papers
- If not a US citizen, provide a copy of your green card (front & back). If not a permanent resident provide a copy of your H-1 or L-1 visa.
2. Get Qualified
How much are you qualified to borrow?
When buying a home, you may be pre-qualified or pre-approved. Whether on the phone or on the Internet, you can be pre-qualified in mere minutes.Pre-approval requires a more demanding process: verification of credit, income, assets, liabilities, etc. Before you start looking for a home, it is strongly encouraged that you be pre-approved.
- Informs you of your maximum affordable home value. Saves you from previewing properties outside your price range.
- Improves your negotiating position
- A pre-approved loan helps you close quickly.
3. Shop Loan Programs and Rates
Which loan program benefits you most?
- How long you plan to keep the loan. If planning to sell your home in a few years, consider an adjustable-rate or balloon loan. If planning to keep your home for a longer time, consider a fixed-rate loan.
- Understand the relationship between rates and points. Points are prepaid interest and may be tax deductible. Each point is equal to 1 percent of the loan (Ex: 1 point on a $150,000 loan is $1,500). The more points, the lower your rate.
- Compare loan programs. Consult an experienced professional who can help you choose the loan program that best fits your short or long-term plans.
4. Apply for a Loan
Research and preparation makes applying easy!
Apply online or in person. Complete and sign the residential loan application (Form 1003) and the attached loan info sheet, credit authorization, and fair lending notice. You may need additional documents.
5. Obtain Loan Approval
The loan approval process begins once your loan application has been received. Verification includes:
- Your credit history
- Your employment history
- Your assets (bank accounts, stocks, mutual fund, retirement accounts, etc.)
- Property value
Depending on your situation, additional documents or verifications may be required.
Improve your chances of getting a loan approval:
- Fill out the loan application completely.
- Respond promptly to any requests for additional information. This is particularly important if your rate is locked or if you plan to close by a certain date.
- Anything causing your debts to increase might have a negative effect on your current application.
- Don’t move money into your bank accounts unless it can be traced. If receiving money from friends, family or other relatives, please contact us.
- Don’t leave town near the closing date. If your absence is unavoidable loan is expected to close, you may sign a power of attorney, to authorize another person to sign for you.
- Notify your loan officer before applying for any other credit (credit cards, personal loans, another mortgage company, etc.). Some loan programs have rigid guidelines regarding credit score. Credit inquiries may lower your credit score and negatively affect your loan approval.
6. Close the Loan
After your loan is approved, you will sign the final loan documents. This usually takes place in the presence of a notary public. Be prepared:
- Bring a cashier’s check for down payment and closing costs if required. Personal checks are not accepted.
- Review each final loan document. Ensure the interest rate and loan terms are what you were promised. Verify overall information accuracy.
- Sign the loan documents. The notary will require that you have your picture ID. Some lenders expect your Social Security card.
Your loan normally closes when the loan documents have been signed. With refinance and home equity loan transactions, federal law requires three days to review the documents before your loan transaction can close. Purchase transactions do not have a three-day rescission period.