Your Mortgage Process Can Be Worry-free

The process of applying for home mortgage loan can be intimidating. Closing on a home and finalizing the paperwork on a mortgage loan can be a daunting task that some describe as “signing their life away”. Although there are many aspects of obtaining a home mortgage loan that may overwhelm you, it doesn’t have to be a stressful process, if handled in the right way.

The key to a worry-free mortgage process is to be prepared and informed. Follow these simple tips to ease the stress out of your mortgage loan process:

Know your credit standing. The biggest mistake people make when applying for a mortgage loan does not knowing their credit standing. The Fair Credit Report Act allows for everyone to obtain a full credit report once a year, at no cost. Reviewing your credit report may highlight past due or negative accounts that may have been overlooked. Review the information to make sure everything that is reflected is accurate. It is important that your credit history reflect a positive payment history in order to get the best interest rate and approval for a mortgage loan. It is best if you reduce your overall balance, or pay enough to bring your account out of delinquency, on accounts that may reflect negatively on your credit history. If there are outstanding circumstances, you may want to provide a letter of explanation, regarding negative account standings, to the lender prior to applying for the loan.

Get your finances in order. When people begin the house hunting process, they may also begin purchasing furniture, home decorations, and upgraded electronics. Before you apply for a home mortgage loan, limit your expenses for at least the 6 months prior to the application process. It is best to not make any large purchases and not to make any out of the ordinary deposits. Lenders look at your cash flow to determine stability in your income and spending habits. Making large payments to get your account of out delinquency may appear instable on your accounting statements and should be handled months in prior to applying for a mortgage loan.

Organize your files. Mortgage loan lenders will request paycheck stubs, bank records, tax returns from the previous 2 years and activity statements from any other income accounts. Review your documents and organize them into a file that can be easily transferred to the lender during the application process. If there have been any changes since these forms were completed, make sure you have documented proof of the changes. For example, if you have married/divorced or had change in name/address, provide the lender with a copy of the official document noting such changes.

Obtain a down payment. There are many mortgage lenders that offer 100% financing on a home loan; however, applying for such a loan is not the best option for everyone’s financial situation. The general rule of thumb is, if you don’t have enough money saved for at least a 5% down payment, you shouldn’t buy the house. It is tempting with some of the lowest interest rates in 30 years but, buying a house is a big financial commitment and getting a head start with a down payment is the best long term strategy for any homeowner. If you are lucky enough to have a large sum of saved or inherited money to put down on a house, make sure the funds are traceable and documented. Any funds that are used for a down payment should be deposited into your checking account 2-3 weeks before applying for a mortgage loan.

By: Lee Law

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The Lee Law Firms aims to help local residents resolve their debt issues and achieve a financially healthy future. They provide high quality legal representation that helps lower monthly debt payments, and stop wage garnishment, foreclosures, calls from creditors and repossessions. The Lee Law Firm bankruptcy attorneys have many years of experience in all aspects of Chapter 7 and Chapter 13 Fort Worth Bankruptcy.