The Beginning of Communication with Your Loan Officer
Good communication is key. Simply put, you will be married to your loan officer from the day you are prequalified until you have signed the last document at settlement!
Buying a home is as easy as you make it. It can be stress-free if you have the right guidance and know your expectations ahead of time. Good communication from start to finish is what the home loan process requires for success.
I cannot stress this enough, communication is key in any kind of relationship whether it’s husband and wife, parent to children or boss to employee. When you are applying for a mortgage, an open dialogue is what it takes to reach the closing table and get you into your dream home!
Where The Communication Begins
A loan officer will take your application on day one. Completing an application normally takes about 15 minutes. Getting started is fairly simple. You will be asked questions such as your name, current place of residence, job history, relationship with a real estate agent and where your monthly payment comfort zone is. Behind those questions are the ones that can really make or break your qualification status.
What Information Does Your Loan Officer Need?
Some of the questions that are extremely important for loan approval:
- Do you work full time?
- Are you hourly or salaried?
- Is it a standard 40 hours a week?
- Do you work 37 hours a week or less?
- Do you have a history of late credit card payments?
- If so, is there a valid reason why you were late?
- Have you ever been party to a bankruptcy, short-sale, or foreclosure?
- Are there any liens or judgments against you?
All of these questions are fundamental in getting you pre-approved for a loan, so honesty is imperative. Being straight-forward from the beginning could prevent a misunderstanding later in the process. There is no point in lying or leaving out any details when you give your responses. Your loan officer will eventually discover the truth. It’s better to point out any issues you think that may be damaging no matter how badly you want a loan. Some damaging issues can be resolved and others can’t. It’s better for you to take a couple more weeks to fix or clean up a credit issue than to hide it and have a title agent find it two days before closing. This would put an immediate stop to your loan and you could lose your house!
The Next Steps in the Loan Process
You will be required to provide proof of the statements you make. Your loan officer will need you to provide pay stubs and W-2s. Trust me, they will notice if you work the full 40 hours. The same goes for your credit report which will show if you’ve had any late payments or judgments. (tip: it is crucial you make payments on time all the time! One late payment can drop your credit score drastically!)
After prequalifying you, your loan officer will send you a list of documents that are needed in order to verify that everything you spoke of over the phone matches what you have on paper. These documents will be proof to the underwriter that you make (X) amount of money at (X) amount of hours. It also provides them a road map of your past job history. There is no room for misrepresentation when it comes to your mortgage.
Ideally, you want to gather these documents within 48 hours. This way you won’t forget because it’s fresh in your mind. Also, this will keep your loan moving forward and prevent any delays. Your loan officer wants to keep you on track for a timely closing.
After all necessary documents are submitted your loan will be reviewed by an underwriter. These professionals will go into your file with a fine tooth comb and verify you meet all the qualifying guidelines. They may even ask for additional documents. Your loan officer will once again reach out to gather the required items. Again, communication will be key. The faster you gather the necessary documents and submit them to your loan officer the sooner they can be reviewed by the underwriter. They hold the key to a final decision on your mortgage preapproval. Don’t keep them waiting.
At times your loan officer might seem like a nag. They might ask for additional bank statements, by request of the underwriter, including more recent pay stubs! All I can say is be patient. Trust me when I say the loan officer is doing their job. Don’t shoot the messenger, as they say. Their job is to make sure your loan is approved and not denied. They want to make sure all the I’s are dotted and the T’s are crossed. A loan officer may ask once or they may ask a billion times. I sure hope not, but you get my point.
What If You Don’t Qualify for a Loan?
If by chance the loan officer is told by the underwriter that you are not eligible at that time, don’t lose faith. Ask them what the problem is and what steps you can take to resolve the issue. It could be something as simple as paying off your credit cards or saving up a few hundred more bucks as reserves for closing.
Here’s a little rule of thumb when it comes to your credit I like to share. I see this situation stop potential buyers like yourself from qualifying often. Try to keep your credit card balance to 30% or less of your max amount allowed. For example, if you have $1,000 max credit line, lenders would like to see less than $300 as your balance. Do this and help boost your credit score! Get a better credit score and better interest rates. It’s a win-win situation!
There are lots of moving parts throughout the process. For it to go smoothly keep a couple things in mind. Avoid and change in jobs until after settlement but, if you do, please seek advice from your loan officer. Don’t add new debt to your credit report. No new cars, or large ticket items. We don’t want to hurt your chances of a loan approval. Remember, communication is the key.
Full disclosure, sometimes loan officers can misunderstand their buyer’s situation. I recently had a couple call to ask if they could buy a new tv for their soon to be home. Immediately, I advised them, “I would not suggest you purchasing a new tv on credit.” Turns out I jumped the gun. They actually had extra cash from the sale of their current home and were planning on using the cash and not credit. Knowing now that this wouldn’t affect their credit I did have to check to see if they had enough cash to close. They did. Phewww, talk about my heart almost skipping a beat. New credit could have delayed or even stopped the closing from happening as would lack of cash in their savings.
The last thing you want to do is jeopardize your loan in any manner. If you are unsure about any financial changes during the loan process just simply talk to your loan officer. I can honestly say your loan officer is working with you and for you. We are on the same team!