Secrets to a Smooth Homebuying Experience

Successfully navigating the homebuying process requires careful planning and attention. There are many steps involved in obtaining a mortgage, and it may seem daunting at first, especially for first-time homebuyers. Having a team of trusted professionals by your side to guide you through the process can help make the experience as smooth and stress-free as possible.

Read on to discover a few secrets that will help ensure a smooth homebuying experience.

Consider speaking with a Mortgage Loan Officer before selecting a Real Estate Agent

Speaking with a Loan Officer is a smart first step when considering a home purchase. They will help you determine your budget, so you know your price range before you start looking at homes.They can also help you get pre-approved for a mortgage, which will enable you to act quickly when you decide to submit an offer on a home. In a market where homes are selling quickly and often receiving multiple offers, having a pre-approval and a strong understanding of your budget before engaging a Real Estate Agent can be advantageous. Finally, your Loan Officer can match you with a local Real Estate Agent who understands and knows how to compete in your local market.

Looking for a way to boost your pre-approval and further amplify your offers? Talk to a Summit Loan Officer about our Seller’s Choice Guarantee!

Have your credit in order

Before you begin the home financing process, it’s best to have your credit in order. For FHA loans, lenders typically require a minimum credit score of 580. For conventional mortgages, the minimum is a bit higher, usually around 620. A strong credit history and high score will help you secure a better interest rate on your mortgage.

If your score needs a quick boost, consider catching up on any overdue bills and paying down your credit cards to lower your utilization rates. During the mortgage process, it’s important not to open any unnecessary new credit accounts. Hard inquiries on your credit report can harm your score, and any new debts can impact your debt-to-income ratio, potentially putting your mortgage approval at risk.

If you’re in a position where you may need to rebuild your credit, there are resources available, such as the Credit Handbook published by the Minnesota Attorney General’s office. There are also credit counseling programs, such as those offered by the National Federation for Credit Counseling.

Check out our blog to learn how to increase your credit score by 100 points in 45 days.

Understand what documents you will need

A mortgage is a big commitment not only for the borrower but for the lender as well. Because of this, there are certain documents you must provide for the lender to do their due diligence to ensure your financial eligibility. Some of the documents you should have ready before applying for a mortgage include:

• Tax returns: Lenders typically require a copy of your last two years of tax returns. You can use the IRS tool to request a copy of your transcripts online, or you can complete Form 4506-T to request a copy by mail. If you’re self-employed and using that income to qualify for a mortgage, you will also need to provide your business tax returns.
• Paystubs: To help them verify your current income, lenders will typically want to see your pay stubs from the past month or so. If you’re using other income to qualify for a mortgage, such as spousal support or child support payments, Social Security benefits, investment or rental income, and business income, you may need to show your lender proof of income through 1099 forms, direct deposits, or other means.
• Bank Statements: Some mortgage programs have reserve requirements, so lenders typically request bank statements to ensure you have enough reserve funds to cover your mortgage payments. They will also use your bank statements to ensure that the funds you intend to use for your down payment didn’t show up overnight in the form of a loan or gift. If you are using gift funds for your down payment, that is fine; you will just need to get a letter from the person giving you the funds stating there is no repayment obligation.
• Credit Reports: With your permission, lenders will pull your credit report to assess you as a borrower. The mortgage programs you may qualify for depend partly on your credit score.

While these are the most commonly required documents in the homebuying process, there may be others needed based on your unique situation. When you work with a Summit Loan Officer, they’ll let you know exactly what you need to provide.

Now that you know some of the secrets to success when it comes to buying a home, you’re all set to start your journey! If you’re ready to get started or have questions, Summit is here to help!