Once you decide to buy a house, often an exciting and happy occasion, the prospect of applying for a mortgage looms. That's too often the dark side of the process.
You can make it easier on yourself if you know what to expect and have in hand most of the information you will need to hand over.It's wise to get everything together before you even apply for the mortgage. Take it with you when you go to the mortgage office to fill out an application. The more complete the file, the quicker the process moves ahead.
Most of these suggestions on what to have in hand come from the trade publication Real Estate Today and an article by Rick Cossano, a loan officer with Countrywide Funding:
This information is key. You typically will need at least two current pay stubs from each spouse if both work. Some lenders also require a year or two of tax returns. If you are self-employed, you'll need not only two years of tax returns for yourself and your business but also a current year-to-date profit-and-loss statement.
Make a neat list of all your liabilities, including revolving credit, credit cards and auto loans. Include names, account numbers, balances and minimum payments.
You'll need a list of any banks with which you have accounts, with their addresses and your account numbers.
Also supply records of savings or investments you have in stocks, bonds, mutual funds and certificates of deposit.
Be prepared to show where you'll get the down payment. It should be money that's readily available, not a car that is to be sold or certificates in a foreign bank that may take a long time to get.
You probably know if you have a good credit record or not, but it's a good idea to check to see what's in the credit bureau files. Your real estate agent can tell you how to do this.
If you have had any special problems, be prepared to explain them and show proof that they have been resolved. A bankruptcy, for example, makes it difficult to buy a house. But if you have cleared up your debts and put it all behind you, you may be able to get a mortgage.
Gaps in employment are another problem because lenders fear you won't have enough income to pay the monthly mortgage.
"Lenders want to see information that leads them to conclude that buyers with past gaps are likely to succeed in their present job," Cossano said. "For example, the lenders would probably look favorably on an engineer who took time off from working to get an advanced engineering degree or to study engineering practices in another country.
Once you've put in your application for a mortgage, keep in touch with the loan officer whose name you've been given. It's OK to call periodically - say, once a week - to find out the status of your loan and make sure the lender has all the information needed.
You also can prod outsiders who can slow down the process - an employer who is slow to return a sheet of paper confirming that you work for the firm, or a bank that has yet to verify your accounts.
Stay on top of the loan process and ask your real estate agent to do the same. A lot can go wrong, so it's in your interest to know what's going on.