Your mortgage lender is another crucial arm of your home buying team. It is important to find a lender that will dig in and find you the best programs and rates you qualify, and let you know what you can afford to spend on your home. No one likes to shop without knowing what’s in their wallet, so why would you put in an offer on a home without knowing if you can get a loan for that amount? A Realtor won’t even put in an offer without that pre-approval letter because that offer is likely to be rejected without it. Having this lender contact will let you know what to expect in monthly payments before you even have the home under contract. Your lender is specifically trained to help you make the most of your investment in what is likely the largest expense to date in your life.
Having a lender you trust can make or break your transaction experience. A good lender will ensure a smooth transaction, while a bad lender can make the process a living hell. A lender worth their salt will make sure deadlines are met, paperwork is processed in a timely manner, and do everything they can to hit the closing deadline. Without that active and dedicated team member on your side, the deal can be delayed or even fall through.
You might also regret your choice on lender if you end up paying a higher interest than you should have if the lender had done the appropriate legwork to finding you the best options. Disorganization or delays in processing can cost you the home of your dreams, so finding the right fit is so important. The Ask A Walker team can recommend some highly tested and trusted lenders for you to work with.
You can find a list of the documents you’ll need to provide to your lender below, you can also view a video interview we’ve done with one of our recommended lenders here, documents for the mortgage process.
- A complete application – provided by the lender
- Two months (recent) of asset information: 401K, stocks, Retirement funds, checking, savings, mutual funds, IRAs, CDs, etc. (These items will be listed on the application as well)
- Most recent month of paystubs
- The past 2 years of W-2s
- The past 2 years of tax returns
- The past 2 years of Corporate Tax Returns (if self-employed)
Pre-Approval- Generally, within the first 2-3 day of receiving the documents listed, your lender should be able to provide you with a pre-approval letter for the amount you can afford to borrow. The lender may ask for more documents to help process the loan application, or for clarification on one or more documents. Once we have this number, we can build a search profile for you. The lender isn’t trying to be difficult or cause issues, but they do want to ensure that we don’t create another housing bubble like the one we saw in the mid 2000’s. They are under stricter federal mandates and regulations than they were 10 years ago. Your lender should be able to show you details about your loan including estimated payments, PMI, taxes, and insurance. Make sure you are comfortable with this payment amount before moving forward, you may want to decrease your budget based on these numbers.
Grants and Free Money- There are several state and federal programs in place to help cover some of the costs of buying a home. These include, but are not limited to, down payment assistance programs, closing cost coverage programs and more. You may want to ask your lender about the details and find out if you qualify.
Understanding your Loan Estimate and Closing Costs-Regulations in the lending industry have been put in place to protect you and your assets when it comes to taking out a mortgage. Lenders are required to provide you with a Loan Estimate (LE) within 3 days of your pre-approval, this shows you your closing costs in addition to the down payment that you will need to have available at the time of closing. You should never be surprised by your loan, and if you have any questions about the numbers, you should feel comfortable asking the lender to explain them in more detail.
Please look over this Sample LE available below, this will outline the costs you should expect to see. Notice that the closing costs include lender fees. Make sure you understand all of these numbers before you move forward. This is only an example, interest rates may vary please contact your preferred lender to get an accurate loan estimate for your situation.
Shop Around for Lenders- You should absolutely shop around for a lender that fits your needs. All lenders charge different fees and rates. If you have several lenders pull your credit rating close together in an attempt to get the best rates, it can affect your credit score. But if you wait a few weeks between each pull, your scores won’t be affected. We recommend shopping at least two lenders before making a choice and waiting 2 weeks between meetings. The lenders will need to pull your credit reports to ensure accurate rates.
For any questions about the pre-approval process, call us at 703.539.2053 or email us at [email protected]
About the Author: The above article was written by Abraham Walker, Your Alexandria Virginia Real Estate Agent, helping clients market their homes to achieve high sales with a quick closing time is my main priority.
He’s the co-founder of Ask A Walker and can be found on YouTube, Facebook, and HERE on this blog.
Abraham can be reached via email at [email protected] or by phone at (703)539-2053.
He’s happy to answer all your real estate questions.
Thinking of selling your home? Check out my 20+ step process to selling your home. Or contact me now to start the home selling process. Same day appointments are available on a case by case basis.
Your Alexandria, VA Realtor, Abraham Walker, helps people sell and buy real estate in the following Northern Virginia area cities & neighborhoods: Kingstowne, Island Creek, Cameron Station, Overlook, Alexandria, Old Town, Belle Haven, Fort Hunt, Mount Vernon, Springfield, West Springfield, Burke, Lorton, Woodbridge, Lake Ridge, Manassas, Annandale, Fairfax, Arlington, McLean, Reston, Herndon and of course Vienna.