Applying for a Home Loan
If you are planning on purchasing a home, don’t waste your time calling the Realtor on the sign in front of the house. Most Realtors will require a pre-approval from a mortgage company before they will let you make an offer on a home, and sometimes before they will even show you the house. Call me directly at 810-780-4506 or email me at firstname.lastname@example.org to get started with applying for a home loan.
Unlike other mortgage loan companies, my services are entirely free. I do not get paid until your loan CLOSES and you have your new home; which means unlike other mortgage loan companies, I must deliver great customer service start to finish. If at any time if you feel like your loan isn’t being handled properly then you can go somewhere else and none of your money is lost vs other mortgage loan companies where you must pay upwards to $500 for a consultation and risk losing all your investment if you are unsatisfied with your loan officer’s performance.
Applying for a Home Loan Step 1: Pre-Approval
1. On your initial phone call, we will talk together and I will ask you loan qualification questions regarding your work history. Almost all loans require a two year work history; however there are exceptions like being a stay-at-home mother or father and returning to the work force or having just graduated from college and starting a new job in your area of study. If you happen to be receiving income from Social Security, Social Security Disability, a Pension, or any other retirement plan, then this two year work history is not needed.
2. We will then talk about your credit score called your FICO score. Most loans require a 640 score. There are three companies that report your FICO score: Experian, Equifax, and TransUnion. Typically, loan products will use the middle score of the three scores you have on your credit report. Here at Icon Mortgage, we run your credit for free- remember that you will never pay costs or fees until we CLOSE your loan! I will then analyze it, usually while we are still on the phone, and immediately be able to consult you on whether you are approved or not.
If you have a FICO score below 640, don’t worry. I can’t stress enough that I want to help everybody finance their perfect home. Icon Mortgage can do home mortgage loans as low as 580 FICO score! It will require my expertise to evaluate whether you meet the “compensating factors” that are required to get these lower FICO scores to the home mortgage closing table. We can discuss these options while you are applying for a home loan. Some of these compensating factors include:
- Your current monthly rental expense is more than your new mortgage payment (many apartment leases are going to be more than your new mortgage payment!)
- You have savings in your bank account or one of your retirement account that equal to or greater than 3 months of your new mortgage payment
- You have been gainfully employed at your job for several years, typically over two years full time
If you are not approved based on your credit score, again, don’t worry! I will consult you on how you can be approved for a home loan in the hopefully near future. I have 12 years in the mortgage business, and I will happily advise you on how to raise your FICO credit score. Sometimes it could be as easy as paying down a very small balance credit card.
3. I will also ask you about your current housing situation. There are different situations that are helpful when applying for a home loan, for example, if you have been renting for 12 months or more.
4. Next, I will ask if you have ever had a Chapter 7 bankruptcy, Chapter 13 bankruptcy or a home Foreclosure. If you have had one of these, click here and I will outline the guidelines for securing financing for each type of home loan in your approval process.
Applying for a Home Loan Step 2: Supporting Documents
Once I have pre-approved you for your home loan, I will ask for the following supporting documents, regardless if it for a Refinance, or purchase utilizing a RD, FHA, VA or conventional loan. I work for you ,so please for your own sake be transparent with me. I am here to help and all conversations are confidential. If there is something that you don’t disclose, it will be caught last minute and you may be dis-qualified for your loan, sometimes losing the opportunity on the house you want to buy.
Loan documents required:
- Past two (2) years of W2’s and 1099 for all jobs held including un-employment.
- Past two (2) years of form 1040 tax returns, if you are self-employed please include all schedules.
- Any divorce decrees or Chapter 7 or Chapter 13 bankruptcy paperwork, all pages.
- Most current two (2) months of bank statements.
- Most current 30 days of concurrent paystubs, if paid bi-weekly typically three (3) paystubs are necessary to span a 30 day period.
- Most recent Social Security/Social Security Disability/Pension awards letter if applicable for all persons in the household that receive these benefits.
Applying for a Home Loan Step 3: Using your Pre-Approval
If you are refinancing your current home, the only thing to do next is order an appraisal and the process is rather smooth and off-hands for you as long as there is no problem with the appraisal. At Icon Mortgage, we lock in your loan terms at application at no fee and pending appraisal, closing happens very quickly.
If you are purchasing a new home, I finish documenting your pre-approval and complete your loan application:
1. I complete your loan application, submit your loan through either Fannie Mae, Freddie Mac, Rural Development’s GUS system or FHA which are all automated underwriting systems; basically I input all your info into my loan origination system to receive an official yes or no. A yes is eligible/approved a no is ineligible/unapproved. If you are not approved, we can still work to get the loan approved with the above extenuating circumstances I spoke about. If you get the Approved/Eligible then most likely your loan approval conditions will be minimal.
2. Next step: I e-mail you your pre-approval, which you give to your real estate agent if you have one. If you don’t have a real estate agent, I have several dedicated agents, the best in the business locally, to refer to you. Please don’t automatically call the real estate agent on the sign of the house you are interested in without researching the agent’s reviews; they may only care about representing the seller of the home and not care about protecting your interests in the sale. A specialized buyer’s agent is the best friend you can have while shopping for a new home, investment home or vacation home because they work for you.
3. YOU FOUND A HOUSE!! Great! Consider calling me first before you make an offer, especially if you think it may be at the top of your budget. I will look up the property tax information and we may want to get a home owners insurance quote so you know exactly what the monthly mortgage payments are going to be before you put down a deposit. Next, you will then make an offer and hopefully it is ACCEPTED! You will then have your Realtor send me the fully executed purchase agreement or PA. I will then input all of the information from the contract into your loan, and we will continue with the financing!
Applying for a Home Loan 4: Finalizing your Loan
- You’re pre-approved, and you have an accepted purchase agreement for your new home, the next step is to make sure your loan officer has up to date pay stubs, bank statements and any updates on your financial/marital/housing/legal situation because it may have been a long time since you first applied and these things may make a difference.
- Loan Estimate (LE) is sent out for e-signature or we meet in person and sign.
- After LE is signed, credit card information is taken and the home appraisal is ordered, the cost is typically $500 depending on appraiser. Appraisers are required to be third party per Federal Law and the costs go directly to them, we charge no fee for appraisals.
- Your mortgage loan then goes to Underwriting which is the final step (for most loans) before you get your Closing Disclosure or CD, which starts the Federally required three (3) day waiting period;then the final Clear-to-Close.
- This Closing Disclosure is a new Government form that replaces the old GFE or Good Faith Estimate from 2015, it is designed to disclose to the borrower all fees to the maximum probability that you may be charged in the home mortgage process. The Closing Disclosure is an awesome tool to anyone looking to purchase a home or refinance because now there is no surprises at the closing table. You review the CD or Closing Document and then have a required 3 business days before you are legally allowed to close the mortgage, you then get the clear to close then you can name your time and date when you want to sign documents and get the keys to your new home.
- Thanks for reading my Mortgage Loan Process, just any of my clients if you have any questions please contact me at one of the numbers below.