It’s no secret that the regulatory environment surrounding the mortgage lending industry has made the loan process increasingly difficult for all parties involved (buyers, sellers, agents, lenders, appraisers and many other industry folks). As a result a question that commonly comes up amongst this group is what can be done to make the loan transaction more efficient, timely and with as limited stress as possible for everyone involved.
With that in mind today we’re going to focus on five important things that you as the homebuyer can do to ensure that your loan process goes as smoothly as possible:
▸ Contact a qualified lender before you go home shopping
It is especially important that you do this before writing an offer on a particular property. This will ensure that you are in the right loan program, understand what documents may be necessary to fulfill the loan transaction, and have a general idea of what your monthly mortgage payments will be.
▸ Choose a homeowner’s insurance company to go with as early on as you can
Waiting too long to select a homeowner’s insurance company is one of the biggest—yet most avoidable—causes of delays during the loan process. In order for your loan to receive final approval to close the lender must have documentation of binding coverage and a copy of the declarations page of your homeowner’s insurance policy. A lender simply cannot clear your loan for closing until this vital piece of information is received. As such the earlier in the process this task can be completed the better.
▸ Be prepared in advance to provide any documentation that your lender may request
It’s not the goal of any lender to make you jump through a bunch of hoops in order to close your loan transaction. However, there are certain documents that lenders themselves are required to obtain from you in order to ensure that compliance laws, secondary market guidelines, and regulatory standards are all met. Some of the most common documents your lender will likely request from you include the following: a recent paystub, your two most recent federal tax returns and W2s, a recent bank statement, and a copy of your driver’s license.
▸ Notify your lender of any material changes that could impact your financing
Communication is a huge key in any real estate transaction. It’s important for the lender to communicate timely updates to you as well as return emails and phone calls promptly. At the same time it’s also important that you as the client inform your lender of any material changes to your employment or financial situation as these things can potentially affect your ability to remain qualified for the loan. Things like job changes, opening or closing a bank account, having a large deposit to your bank account that will be used for closing, etc. need to be communicated to your lender as soon as possible.
▸ Don’t be afraid to ask questions
Asking questions is also a key component of being informed of what will transpire. Questions such as What is my rate?, What will my monthly payment be?, When will my first payment be due?, How much cash will I need to bring to closing?, etc. are all good questions to ask your lender. It goes without saying that your lender should be addressing these things with you upfront. But just in case they aren’t or you’re unclear on something don’t be afraid to ask about it. The lender’s job is to ensure that you understand everything involved with your loan transaction and they should be happy to answer any lingering questions you may have.
Thanks for reading!