Jane’s heart is racing, her palms sweating. All she can think about is running home to hide and/or throw up. Based on her actions, you would think she has a date with the grim reaper. In actuality she is applying for. . .a mortgage.
Jane isn’t alone; studies have shown that people applying for a mortgage have more erratic vital signs than astronauts about to depart for a mission in space.
If you find the thought of blasting off into outer space more calming than filling out a loan application, here’s something you should know—lenders want to lend you money. It’s true. This isn’t the old days when you had to have perfect credit and tons of dough before you could get a mortgage. Today there are copious amounts of banks, credit unions, and wholesale lenders with various programs to suit the diverse needs of consumers.
Individuals with bankruptcy, no credit, and collections can be approved with the right lender and the right program. First time home buyers have their own programs. If you don’t have a down payment, don’t worry; you’ll just need a zero down home loan.
So take a deep breath and read through these next three tips on applying for a mortgage. It’s not so hard, really!
Work with a broker
If you are nervous about applying, my best advice is to work with a mortgage brokerage instead of directly with a bank.
Banks have more stringent guidelines and don’t offer very much individual advice. Brokers on the other hand not only work with banks for you, but also with wholesale lenders who have more lenient guidelines and creative programs.
A broker will take your application, see where you would fit, and then shop around for a good rate. And if you don’t immediately qualify, they’ll explain why and offer advice on how you can remedy the situation.
Mortgage brokers work on commission so if they can’t find you a loan, they don’t get paid. Loan officers at banks get paid a salary or hourly wage with small commissions on mortgages. Because of this, a mortgage broker will be much more motivated and will work harder to get you a loan and make sure that you are happy.
Remember honest Abe
Be as honest as possible with your loan officer. If you try to hide information from them, almost 100% of the time they are going to catch it. By spilling all the beans up front you will have a smoother loan process and avoid snags that could cost you to lose your loan, and your dream home at the last minute. Most of us have seen or heard it all anyway.
Don’t avoid the inevitable
If you are buying a new home, meet with a loan officer in the beginning of your search to get an idea of how much you can afford. Most people put if off because they are scared and in turn they waste a lot of their time (not to mention the sellers’ and realtors’ time) looking at homes they can’t afford.
So just get it over with. Go meet with a professional who can tell you how much you can afford, what your payment will be, and what type of program you qualify for. You will eventually have to meet with them anyway. Once it’s out of the way you can stop worrying about it and enjoy the searching/buying process a whole lot more.
Feel free to contact me if you’d like to discuss which mortgage programs would work best for you.
Chelsea Collier is a licensed home mortgage specialist in both Oregon and Washington, as well as a frequent contributing writer for OHM. Please don't hesitate to contact her with any questions you may have about financing (or refinancing) your home.
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