Navigating the mortgage process can be a time-consuming venture for anyone. This is one of the reasons that I recommend that buyers work with local banks as their underwriters are also local. Many parts of the mortgage application process are beyond the home buyer’s control, but there is a way for the home buyer to cut 10 days off of the mortgage application process.
When you work with the larger banks, like Wells Fargo or Bank of America, you may be able to get 1/8 of a point off your mortgage rate, but the mortgage originator that you meet with at the local branch of a larger bank does not have the same level of control over the processing of your loan than a local bank does. This leads to last minute requests for additional paperwork, resubmission of paperwork, changes to the previously cited interest rate, closing delays, and other inconveniences that will cause the home buyer headaches and potentially make a deal fall through. That is to say nothing of issues that may arise during the years that you own your home.
When you walk into a bank, a mortgage originator legally can not ask you for supporting documents until 10 days after your original meeting. This is because the financial reform legislation known as Dodd-Frank, includes language that ensures that consumers are given sufficient time to shop around for a mortgage. So it makes sense to make a few phone calls to some local lenders to see who has the best rate to make your decision before walking into a bank.
If you walk into your bank with your supporting documents, you can shave at least 10 days off the time it takes for your mortgage to be approved. By bringing in your documents, you are telling the bank that you have already shopped around and are ready to proceed with the application process.
The documents that you should bring with you are:
- Copies of your W-2’s from the last two years
- Copies of your most recent pay stubs from the last two weeks with year-to-date earnings.
- Copies of Social Security checks, retirement pensions, disability checks (if direct deposited to your bank account, bring the bank statements showing these deposits.)
- If you are self-employed, bring copies of your federal tax returns for the last two years.
- If you own rental property, bring copies of your last two years’ federal tax returns.
- Bank statements from the last three months, which include your address, account number, and balance.
- A list of outstanding loans including address, account numbers, monthy payment amounts, and outstanding balances.
- A list of credit cards including account numbers and outstanding balances.
You also may want to contact the lender that you choose to see what information that they require.
It is always a good idea to get pre-approved for a mortgage before shopping for a home. It allows the home buyer to learn what their mortgage payments will be at certain price points, what their closing costs will be, and what their interest rate will be. In other words, it allows the home buyer to negotiate an offer on a property with their eyes wide open. Although there may be a few exceptions, working with a local lender also helps to ensure a smoother transaction.
If you are planning on buying or selling a home in the Pioneer Valley, make your first call to Michael Seward at 413-531-7129 or email me.