Here at Mortgage Specialists, one of our favorite aspects of the job is educating our clients on the mortgage process. It isn’t a process that many go through often, so we’ve compiled a list of frequently asked mortgage questions.
How do I know if I’m ready to buy a home?
Making the decision to buy your first home can be difficult and it’s a decision that we can’t make for you. However, we can help you decide whether or not you are financially ready to purchase a home. Below are several indicators that you are financially ready to buy a home:
- You don’t have a lot of debt.
- You have an emergency fund saved.
- You’ve saved for a down payment.
- You have good credit.
- You have a stable income.
Need additional help making the decision? Head over to our blog Are You Ready To Buy Your First Home? for questions to ask yourself that may help you with your decision.
How do I choose a lender?
Choosing the right lender is a big factor in how smooth your mortgage process will be. That’s why we encourage home buyers to shop around for their mortgage lender. When shopping for a new vehicle, you usually don’t just go to one place, you shop around for multiple options. It should be the same with your mortgage.
At the bare minimum, we recommend evaluating a few lenders on the following criteria:
- Compare rates and fees.
- Look through testimonials and reviews.
- Ask a trusted real estate agent about the lenders’ professional reputations.
- Evaluate communication levels.
For additional help in choosing the right lender for your next loan, check out our blog How To Choose A Lender. We compiled a list of questions for potential buyers to ask lenders and why those questions are important to ask.
Why should I get pre-approved?
One of the most frequently asked mortgage questions we get is about the pre-approval process. We highly recommend getting pre-approved if you’re thinking of buying a home in the next year. It can take as little as 10-20 minutes to do and will benefit you in many ways throughout the home buying process. Below are just several of those benefits:
- You’ll know your price range – which can provide your agent with a better idea of which houses to look for.
- You will get taken seriously by sellers and real estate agents.
- You’ll close on your home quicker.
- Your offer will be competitive against other offers.
What documents do I need to apply for a mortgage?
We know the paperwork is what every buyer dreads most and are here to tell you that it isn’t so bad. And the best news is that when you put in an offer on a home, we already have all of these documents on hand, so at most we’ll only need a few updated documents.
Below are the documents we need to finalize your pre-approval:
- Paycheck stubs for the past 30 days
- Two years of W-2 forms
- Two months of checking and savings account statements
- Copy of your driver’s license
- Two years of federal tax returns (if self-employed or own rental properties)
- Last quarterly retirement and investment statements
Not sure what all of these documents are supposed to look like? We’ve compiled a page with examples of each document so you know what you’re looking for.
Can’t I just take a screenshot of my bank account?
Many of the frequently asked mortgage questions we get are regarding the documents needed. With so many people turning to online and mobile banking in favor of going into the bank, accessing financial records has never been easier. When asked for banking information, it may be tempting to just take a screenshot and shoot it off to your lender. Unfortunately, even if that screenshot clearly shows the amount of money in your bank account, it can’t be used when applying for a mortgage. There are certain government regulations in place that dictate the paperwork needed to provide a loan.
In order to verify the amount of money in your accounts, your lender needs statements for each account. Luckily, these statements can be easily accessed online.
How do I know how big of a mortgage I can afford?
We’ve been in this business long enough to know that while the overall price of a home matters, the monthly payment is a more accurate gauge of how much house you can afford to buy. Most clients have an idea of how much money they currently spend on housing per month, so it’s easier to compare what your new payment would be to what you’re currently paying.
The majority of our clients are approved for much more expensive homes than they end up purchasing. They simply choose not to buy at the top of their budget because they’d prefer more manageable monthly payments.
How do I know if I should refinance?
There are many different reasons why people choose to refinance their mortgage. So deciding whether or not it’s in your best interest all hinges on what you’re trying to achieve with the refinance.
With the right refinance, you can lower your monthly payment, withdraw cash from your home’s equity, or become the sole borrower on your mortgage. If any of the following match your current situation, it may be the right time to refinance:
- Current interest rates are much lower than my rate now.
- I want to lower my monthly mortgage payments.
- I have equity in my home and need cash now.
- I’m going through a divorce and would like to have the mortgage solely in my name.
To learn more about the refinancing process, visit our blog Refinancing 101.
Will I get a better rate if I use my current lender to buy a home or refinance my existing home?
No, going through your current lender for a new loan will not benefit you when it comes to rates, closing costs, or overall service. We believe it is in everyone’s best interest to shop around for their mortgage, whether it’s their first loan or one of many.
Have a question that wasn’t covered in our frequently asked mortgage questions? Please don’t hesitate to get in touch!
Ready to start the mortgage or refinancing process? Our online application takes anywhere from 5-20 minutes to complete and we can have you pre-approved for a loan in just a few hours.