Wouldn’t it be nice if ‘get a mortgage’ became a simple task on your to-do list?
You know the saying “the devil is in the details”? Well, it applies to the mortgage process too. When you’re buying or refinancing a home, usually it’s the big stuff like income, downpayment and credit that can cause the most anxiety – and, as a result, the small stuff can sometimes get overlooked. Instead of having to go back and forth trying to satisfy the lender requirements, reduce the work by checking out these 9 tips for a stress-free closing.
9 steps to leaving your mortgage stress behind
1. Provide the explanation upfront
If you think there may be any blemishes on your credit report, provide the explanation upfront as this information is useful when structuring your application for submission to a lender. Your potential lender will be analyzing your credit report and if your mortgage specialist has already provided a credit explanation upfront, this will speed up the approval process. This tip can apply to other areas of the mortgage application too, so be sure to have a detailed chat with your mortgage professional as they will be able to separate the “nice to knows” from the “need to knows”.
2. Label everything you submit
Make sure you clearly state what is what when sending in any kind of documents. This will reduce review time for both your mortgage professional and the lender when the documents are received. Coupled with the tip above, labeling and providing an explanation upfront reduces the back and forth sometimes required.
3. Make sure your name is on everything
The documents you send to the lender must show you own them, especially when it comes to downpayment confirmation. Ensure your name is somehow connected to the documents you are providing – a handwritten name doesn’t count. Your income documents will likely have your name on there already, but pay attention to the other documents you send in to ensure they contain confirmation of ownership so they can be quickly reviewed and accepted.
4. Commit to an account
This specifically applies to down-payment funds from your own resources. Your lender will request a transaction history of your down-payment funds to ensure they have accumulated over time, usually the most recent 60-90 days. If there are any large deposits made within those 90 days, you will be required to provide a paper trail for those funds as well. Try to reduce the amount of transferring between accounts in order to reduce the amount of paperwork you will be required to provide.
5. Read the fine print
Before you sign any documents starting with the mortgage commitment, ending in the final documents at the lawyers, be sure you read the fine print. It’s better to understand the details now than to be blindsided later. The lengthier blurbs are where the meat is, such as pre-payment privileges, payout penalties, document requirements and payment dates. As each lenders approval document is different, don’t hesitate to take the time to review all aspects of your financing with your chosen financing professional.
6. Don’t change your financial profile before funding
One of the most important items contained in the fine print is; your mortgage approval could be withdrawn if you change your financial profile significantly. So on that note, try not to make any changes to your credit or employment before the mortgage has funded. At the very least contact your mortgage professional prior to making the change to see where you stand with your approval.
7. Know your closing costs
Often, the closing costs associated with the mortgage don’t end once your mortgage has funded. In addition to the property tax adjustment and other lawyer related costs, an interest adjustment payment may be due depending on which lender you are with. This means you may have to make a small payment before the first full mortgage payment comes out. Simply put, interest with some lenders is calculated from the 1st of the month, so if you don’t close on exactly the 1st day of the month, you may have to pay interest for the days leading up to the 1st. The amount is dependent on what day your mortgage closed on. Ask your mortgage professional or lawyer for a closing cost estimate, this should include a rough interest adjustment calculation as well.
8. Be prepared for your first mortgage payment
Your closing date and payment frequency selection will determine your first payment date. Payment frequencies can be monthly, bi-weekly, semi-monthly or weekly. There are also accelerated versions of a few of those which are perfect if you want to reduce your mortgage principal faster. When signing documents at the lawyers, ensure you’re aware of the first payment due date and amount, review all the details to confirm the lender has the right payment account too.
9. Double check one last time
When it comes to mortgage financing, make sure you have confirmed all the important details. These include correct term, amortization, interest rate, proper name spelling, the correct mortgage payment account and payment frequency. If there are changes that need to be made, ensure you receive the amended documents.
And, one more move for mortgage bliss…
Talk to your friends, read the reviews and do some preliminary interviews to find the professionals you feel most comfortable working with. The best way to avoid stress during the mortgage financing process is to work with an experienced professional who can clearly explain your financing details, ensuring you’re comfortable with the commitment you’re making.