Entering into the competitive real estate market can feel like stepping onto a battlefield, which is why The Byron Mortgage Team wants to make the mortgage process as worry-free as possible. You may have questions about the process, like what do you need to get a mortgage? Or when should you get started? Continue reading below to discover everything you need to know about securing a home loan.

The difference between a pre-approval and a mortgage application

You might be surprised to know that the best time to get pre-approved for a mortgage is before you begin shopping for homes, but what exactly is a pre-approval? A pre-approval document that you definitely need to get a mortgage. It comes from your lender and states which type of loan you qualify for and how much money you can borrow. Besides helping the buyer understand what you can afford, a pre-approval also lets sellers know you are an earnest contender.

You should always get pre-approved first before house hunting. Once you find the perfect home, it’s time to fill out a mortgage application. Lenders will take a deep dive into your credit and financial history to decide whether or not you qualify for a home loan. Having a pre-approval on file will make the mortgage application go much faster.

Mortgage Loan Documents Checklist

Securing a mortgage can feel stressful, especially for first time home buyers, but finding the needed documents ahead of time will streamline the process.

Here is a short list of the documents you will need to get a mortgage:

⦁ A photo ID
⦁ Two years of tax returns, all pages
⦁ Proof of income – at least one month of consecutive pay stubs
⦁ Permission to pull a credit report
⦁ Proof of rent or previous mortgage history
⦁ Gift money letter if applicable

What other items will the Loan Officer review?

There may be some additional documents you need to get a mortgage. To qualify, your loan officer will take a hard look at your complete financial history, calculating your assets and debts. Besides the items we highlighted above, you can expect your loan officer to examine the below paperwork when applicable:

⦁ Child support or alimony documents
⦁ Form 1099, profit-and-loss statements, and federal tax returns if self-employed
⦁ Investment and retirement accounts
⦁ Immigration status or a copy of your green card
⦁ Proof of cleared debts from a previous bankruptcy or foreclosure

Do you always need a down payment?

In the past, coming up with the traditional 20% down payment has kept potential buyers from going for their dream homes, but now there are multiple ways to purchase a house with little to no money down.

Gift funds
Close family members and friends are eligible to give buyers money to go toward their down payments. The amount allowed depends on the type of loan, and you must submit a letter that states the funds are a gift that does not need to be reimbursed.

FHA & VA Loans
Some first-time or low-income buyers take the route of securing an FHA loan, which requires a smaller down payment than traditional loans. Note that FHA loans require mortgage insurance, which will increase the cost of your monthly payment.

If you have served or if you are currently serving in the armed forces, you have the option of applying for a VA loan, which requires no down payment. Unlike the FHA loan, VA loans do not require you to purchase mortgage insurance.

100% Financing
Many conventional lenders now offer 100% financing on mortgages, which means the buyer isn’t required to put any money down. While these options help with affordability, they do have requirements and often come with higher interest rates.

When should I begin ?

If you are considering buying a new home, now is the perfect time to start the mortgage process. As a first step, learning what you need to get a mortgage is critical. Begin getting your paperwork in order and apply for a pre-approval to get an idea of what you can afford.

Getting a pre-approval is crucial for buying a home in this competitive market. Not only does a pre-approval reassure the seller about your interest, but it also puts you on the fast track toward securing a mortgage.

The Byron Mortgage Team does the hard work for you. With fast approvals, trusted industry partnerships, and streamlined communications, we are your one-stop shop for finding your dream home. Contact us today to get started!