9 Things Your Mortgage Professional Wants You to Know

There are always those key pieces of knowledge that make a job easier. This is especially true for mortgage professionals. Knowing the basics of the following 9 things greatly help when going to see your mortgage professional for financial help.

1. Pay your Cell Phone Bill on Time

Every cell phone bill you’ve ever had affects your credit report. Lenders want to see that you are able to pay your bills on time, even if it is a small payment every month. If you have had issues in the past with paying your cell phone bill a lender will see this as a signal that you won’t be able to handle your mortgage payments

2. Be Prepared to Supply Us with Many Documents

Your mortgage professional is going to ask for many different documents, to the point where it may feel intrusive. This is a part of the lending process as all lending institutions are monitored by governments and investors. The documentation is proof that the lenders are doing their jobs and only approving people who can pay their mortgages on time. Documentation is also used to ensure there has been no instances of fraud or money laundering.

3. You Will Need a Credit Card to get a Mortgage

Credit cards show lenders that you can meet your credit obligations. Make sure to use your credit card and pay it off on time to develop a good credit rating. That being said, ensure you don’t exceed 75% of the available limit on the credit card to show you are a responsible consumer.

4. Mortgages Require a Minimum 5% Down Payment

Though 0% mortgages existed in the past, this system of lending has been phased out. All lenders now require a minimum 5% down payment for a mortgage. This payment can come from personal savings, a loan, or a gift towards your new home.

5. Taxes and Collections Appear on Your Credit Report

If you have a small amount outstanding on your taxes or are disputing a bill that has gone to collections it will show up on your credit report. A lender will not approve you for a mortgage if either/both of these items are outstanding. Make sure to take care of all tax and collections discrepancies before applying for a mortgage.

6. Pay Attention to Details

A mortgage is a contract! When you sign on the dotted line you are legally bound to the terms of the contract for at least the mortgage term. Your mortgage professional will do their best to explain everything to you, but don’t be afraid to ask questions if there is any point you don’t understand.

7. A Pre-Approval Doesn’t Guarantee a Mortgage

It is a great idea to obtain a pre-approval to know your budget when searching for a home, but this status doesn’t guarantee that you will be approved. Many lenders don’t review your application or documents in detail until you bring them an accepted offer to purchase. Once this document is brought to their attention, your application will be considered by the lender and the mortgage insurance company. This process is true even for offers with more than a 20% down payment. Until you receive an approval from the lender nothing is final.

8. You Need to Have Money Set Aside for Closing Costs

Lenders will require you and your mortgage professional to show that you have 1.5% of the purchase price set aside for closing costs. There are costs that come up at the end of the home buying process (legal fees, title insurance, property tax modifications, etc.) that buyers do not always account for. This is a requirement to ensure you will be able to afford to close the sale on your new home

9. Follow Up!

After all is said and done, mistakes can still arise. It’s important to read over everything a second time when you get home and make sure you understand all points and that everything is set up the way you discussed with your mortgage professional. If you are unsure of anything or find an error call your mortgage professional right away! A five minute phone call could correct a simple problem before it snowballs into something much more complicated.

This has been a very quick overview of 9 things your mortgage professional wants you to know. If you still have questions about one or more of these points then call your mortgage professional today! We would be happy to clarify anything for you.