Mortgage Preparation Tips

Now that you have decided to refinance your house or perhaps purchase a new home, you may need a mortgage on the property.  Simply stated, a mortgage is a loan where your lender gives you money and you pledge the property (house) back to the lender if you do not pay your monthly loan amount.

Mortgages are commonly obtained from banks, financial businesses, or credit unions.  These institutions must follow strict guidelines from the government for creating a mortgage because of mandated guidelines and rules.  Also, there are multiple types of mortgage programs so you should discuss your program options with your loan originator.  

Now, there are many documents required to apply for a mortgage loan and your loan originator will have a list of documents needed for your loan application.  Here are a few tips or basics to jump start the mortgage application process. 

  • Obtain two years of income taxes (minimum),
  • Copy of your W-2 forms from your employer,
  • Copy of your driver’s license
  • Documents that show a clear path of your income,
  • Credit report,
  • List of outstanding debts and obligations like credit card debt,
  • List of your current monthly expenses like car payments, utility bills, childcare, etc.….
  • Verification of available funds from your checking and savings account,
  • Proof of your employment and ability to sustain your employment,
  • Other documents as required for various conditional mortgages, like a HUD or VA mortgages

Some things you may not want to do in months prior to your mortgage application process or during the process, that could possibly produce a negative outcome in your mortgage application include:

  • Purchasing large items like a car, television, boat, all-terrain vehicle, etc.…….
  • Taking lavish trips,
  • Purchasing expensive clothing or jewelry,
  • Late payments on monthly obligations

Think of the mortgage application process a little like a job interview – you are trying to impress the lender with your financial skills, and they are trying to recruit you for the loan application.  So, be truthful without exaggeration in the process.   Mortgage lenders want to see a solid candidate with sufficient funds to purchase the house, accountable in paying bills, steady employment history, and responsible in handling income and expenses.  Remember, you are “interviewing” the lender as much as they are “interviewing” you.

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