The Mortgage Process Explained
This is a summary of what is needed to find out if you qualify for a mortgage and for how much you qualify for. Keep in mind, the amount you qualify more might be for more than what you feel comfortable paying back each month. You can always ask your lender to work backwards and show you how much house you should look for based on a monthly payment you feel comfortable making.
This process might look like a lot of work, but your lender will be able to walk you thru the entire process step by step and make it very easy!
Step One: Complete the Lender’s Loan Application
This form will require all of your contact information, legal name and social security number. With this information the lender will be able to pull your current credit scores and figure minimum payments on reported outstanding debt. A copy of the front and back of your driver’s license is also needed at time of application.
Step Two: You Will Need to Document Your Income:
The lender must show that you can afford the new payment on your house added to your current debt. So, they must document your past two year and current work history. The lender sets debt ratios that we must qualify for. They use your average monthly income divided by your registered debt, (we got off your credit report) to figure out your DTI, (debt to income).
The documents needed to figure out your income (for all borrowers) are;
If you are a W-2 employee;
- 2015 & 2016 W-2
- Most recent one months’ pay check stubs
If you are retired:
- Social Security awards letter
- Pension award letter
If you are self-employed;
Do you receive a 1099? Do you own a business? Do you have rental properties? Is part of your pay commission? If so They will need
- Copies of the last 2 years Federal Tax Returns
- Corporate Federal Tax Returns
- Corporate, year to date, profit and loss statement, signed by accountant or officer (if owner)
Do you receive any other income? The more income you show, the more money you qualify to borrow.
Final Step: Provide Copies of Your Bank Statements
The lender requires you to document your liquid cash reserves and your real estate holdings.
- Provide ALL of the most recent, bank statements pages (even if blank) for the prior two months – for both checking and savings. These must be statements, not computer printed activity sheets. Statements are the documents you receive (or used to) in the mail every month. They have the institutions and your name and address.
- If you have any large unusual deposits in your checking or savings, if so, they must be documented.
- If you plan on using a brokerage account for the down payment, you must supply the last quarter’s statement. After approval you will need to document the withdrawal from the brokerage account and the deposit into your checking account.
- Provide the addresses of all properties you own
- The most recent summer and winter tax bills and yearly home owner’s insurance bill (for all properties owned)
- A copy of your current monthly mortgage statement (for all properties owned)
With the above documentation, the lender will be able to get you pre-approved for your home loan and send you the pre-approval letter that your real estate agent will need when you make an offer on a home. While you are looking, you can call the lender at any time to run different loan scenarios and payment options for different properties. They are here to make your home buying experience enjoyable. They work for you!
One of the most asked questions I receive is who do I recommend for a lender? My first response is always John Georgi at HomeLoans, his phone # is 517 323-9380. I have received several good reports of how he is able to explain the mortgage process in terms that anyone can understand and how easy he makes the process. He is also able to make quick turn around times when needed.