Working With Your Lender
You’re just starting your search to purchase a new house - this is an exciting time! Before you schedule your first home tour, getting pre-approved for a mortgage is an important first step.
Here’s a checklist of some of the items your lender may need to help you on your way to buying your next property.
Personal documents.
Have the identification and personal information requested by your lender available. Your lender will explain which documents are acceptable and how to submit them securely.
Review your credit report.
You should be able to do this free of charge. Be sure to dispute any errors. Then, keep your credit score healthy by avoiding any new credit inquiries, canceling any credit accounts, lowering limits with any creditors, or making any big purchases with credit. Doing any of these things could lower your credit score.
Tax returns.
You’ll need to provide tax returns usually for the last two years.
Proof of income.
Depending on your situation, you may be asked for recent pay stubs, W-2 forms, tax returns, employment details, or other documentation. Self-employed borrowers may need additional income records, such as business tax returns or profit-and-loss statements.
Proof of assets and bank statements.
Provide bank statements, mutual fund statements, account balances for retirement accounts, 401Ks, IRAs, and any money held in the stock market.
Debt summary.
Be prepared to discuss credit cards, vehicle loans, student loans, other mortgages, and other financial obligations. Your lender uses this information when evaluating your ability to repay a loan.
Financial issues.
You may need to provide a written explanation if you’ve had bankruptcy or other financial issues in the past.
Down payment and closing money ready.
Have these funds ready in your bank account. Ask how much money you may need for your down payment, closing costs, prepaid expenses, and any required reserves. If you expect to use gift funds or money from another source, tell your lender early so you can follow the appropriate documentation requirements.
Provide financial documents through your lender's approved secure channels rather than sending sensitive information through unsecured messages.
Renting.
If applicable, compile proof for the past year with canceled checks or money orders to show rent was paid on time.
Protect Your Mortgage Approval While Shopping for a Property
One of the most important things to understand is that getting pre-approved is not the end of the financing process. Your lender may continue reviewing your finances and the property until the loan is ready to close.
While you're shopping for a home or land:
Talk with your lender before making major financial changes.
Avoid taking on new debt or financing a vehicle without first discussing the potential impact with your lender.
Be cautious about changing jobs, moving large sums of money, or making unusually large purchases.
Continue making your existing payments on time.
Respond promptly when your lender requests updated documents.
Keep your lender informed when you enter into a contract on a property.
Don't close credit accounts, change account limits, or make other financial decisions based on general advice alone. Ask your lender how a proposed change could affect your particular loan application.
Buying Land or Acreage in East Texas? Ask About Financing Early.
Financing rural property can involve additional questions beyond those associated with a typical home purchase. If you're interested in acreage, vacant land, a farm, a ranch, or a home with substantial land, let your lender know what type of property you're considering.
Ask whether the lender's available programs cover the property and its intended use. Depending on the property, relevant questions may include:
Is the property eligible for the loan program I'm considering?
Are there acreage limits or other property eligibility requirements?
Will the property need a particular type of appraisal or inspection?
Does the property have to meet specific access, utility, or condition requirements?
Can the loan cover a home with significant acreage, or would a different financing option be necessary?
What happens if the appraisal or lender-required repairs affect the transaction?
A loan program suitable for a conventional residential home may not be suitable for every vacant land or agricultural property. Confirm eligibility with the lender before assuming that a particular property can be financed under your intended loan program.
Finding the Right Lender for You
You may want to begin by talking with your current bank or credit union, but it can also be helpful to compare other lenders and loan options. Consider more than just the advertised interest rate.
Ask about estimated closing costs, lender fees, available loan programs, communication, processing timelines, and how the lender handles questions or complications. Make sure you understand whether a quoted rate is locked or subject to change and what conditions apply.
A lender who explains the process clearly and responds promptly can be particularly helpful when you are working toward a contract deadline.
Country Roots Realty does not make lending decisions or determine mortgage eligibility. My role is to help you navigate the real estate side of the transaction and coordinate with your lender, title company, and other professionals as needed.
