A lot is available about the current administration's plan for "extreme vetting" immigrants and refugees in the last month. Still, one other form of extreme vetting is critical to understand for potential home buyers: the mortgage application.
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Decades ago, applying for a home mortgage was simple. There were just a few forms you needed to fill out, along with supplying a few personal financial documents, and that was it! You have your own home! Today, post-financial crisis, things are a bit different. Lenders require a significant amount of documentation to verify who you say you are, not to mention all of the financial documents you need to get your mortgage application approved. Here are a few tips on surviving the extreme vetting that goes into a typical home loan application:
Talk to A Loan Officer Before You Buy!
It's true; loan officers are salespeople trying to sell you a product, and many people are afraid of pushy sales pitches before they are ready to apply. However, your loan officer is probably the most significant source of information and advice you will find – other than this blog, of course! Loan officers are familiar with the entire loan process from beginning to end. They can give you an idea of how it works, the products that would be best suited for you, and what you need to do to get ready to shop for homes.
Get Pre-Qualified OR Pre-Approved
The differences between prequalification and preapproval vary based on the lender or realtor. Many real estate agents will advise their clients to get pre-qualified or pre-approved by a lender before they go home shopping. Prequalification is generally the first part of the process, and it is a quick review of your financial situation. However, preapproval is where a lender takes a deeper look into your financials and may have you fill out an actual application. The most important thing to understand about getting a prequalification or preapproval letter is that it is not a guarantee that your loan will close. Still, it is a good idea to start the process before you start making offers on homes.
Make Sure You Talk to More Than One Lender
Every lender is different, so talking with more than just the first one you meet is essential. Even if you get pre-approved by one lender, you can still choose to apply with others. Buying a home is an expensive endeavor, so it pays to shop around!