So you’ve decided you’re ready to take the big step to purchase a new home. Whether you are a first-time homebuyer or an experienced buyer/seller, the journey from shopping to closing can be an adventure. At times, it’s an exciting and thrilling adventure. Other times, there are disappointments and even road blocks along the way. Since we do this every day, the home mortgage loan process is somewhat second nature to us, but we realize that for many of you buying a home is not something you do regularly.
While there may be the occasional bump in the road that will be unavoidable, we’d like to share some of the typical road blocks (and how we can work together to avoid them), to help ensure you get to the closing table as smoothly (and quickly) as possible. The good news is you’ve chosen a hometown community bank like Eaton Federal Savings Bank for your home mortgage loan needs, so answers and help are always just a phone call (or visit) away. We’re here to help.
Roadblock #1: Missing information. With so much information and documentation requested during the mortgage loan application, it’s not surprising that our first roadblock is also the most common. While some of the information we are asking for on the forms may already be part of your banking profile information, it’s best to make sure that you fill out all of the fields on the forms.
- How to avoid: First gather all the information you need into one place. See our mortgage loan application checklist from our Learning Center for reference. Then double check your work if applying online, or ask your loan officer to review information for completeness before you leave.
Roadblock #2: Potential Credit Issues. While you may have sufficient income now or a steady job, there are a few credit-related issues that can pop up and snarl your loan application. Issues like less than two years at your current job or residence, bankruptcy, foreclosures, collections in your past or student loans not in repayment yet, but still owed.
- How to avoid: Be upfront with your mortgage loan expert. Let him/her know you are aware of potential issues (new job, recent move, etc.). Ask for additional documentation that you might provide to support your credit worthiness. If you have outstanding student loans, ask your lender for an estimate of repayment schedule. Visit a site like AnnualCreditReport.org, which will provide you with a free copy of your credit history with all three credit bureaus. Once you receive the reports, look for any credit accounts or unusual balances you don’t recognize and follow the steps to report these as unauthorized. Feel free to bring your reports to us and we’ll be happy to go over the information with you (since it may be a bit confusing if you’ve not seen a credit report before).
Roadblock #3: Not allowing enough time to close. In the excitement to get the perfect home, or sometimes at the urging of an eager Realtor, borrowers sign purchase agreements with dates that don’t allow sufficient time for loan processing. While your Eaton Federal mortgage loan team will work hard to turn the application quickly into a loan, there can be roadblocks or backlog of applications that require a longer lead time.
- How to avoid: Check with your Eaton Federal loan expert for a comfortable time frame for the closing. Often they’ll recommend a closing in 30 days to allow for sufficient time for all the documents to be processed, but best to be sure before you sign that purchase agreement.
Roadblock #4: Lack of proper documentation. Mortgage lenders require proof of the legal authority a borrower has to enter into mortgage loan contract. The application approval process hits a road block when a borrower can’t produce documents to support their position. For example, when a borrower is a trust, yet cannot show a certificate of trust existence. Or when a borrower is using a power of attorney to purchase property but the documentation is older than two years. Or a borrower can’t show proof they have the funds needed to cover the down payment, closing costs and necessary reserves.
- How to avoid: Take time during the house-hunting period to track down documents like power of attorney, trust agreements and other legal documents showing your right to enter into financial contracts. Contact your attorney to make sure the documents are up to date and accurate. Get up-to-date financial statements of account balances and keep accurate records of significant financial transactions (where money came from, where it went, etc.)
Roadblock #5: Scheduling conflicts. Work or travel schedules of the seller or real estate agent can make it difficult for an appraiser to make contact in order to gain access to the property. If you are purchasing during a busy buying or selling season, say spring, then add in the busy schedule of the appraiser. This road block can be very frustrating to deal with.
- How to avoid: When you can, make your home buying decisions during a quieter mortgage season. You may get more incentives from the seller, as there are fewer buyers looking. Ask the seller during the purchase negotiations if he or she will have difficulties providing access to the appraiser, inspector and others during the next two to three weeks.
Knowing the roadblocks before you hit them can save you aggravation, time and money. Your Eaton Federal mortgage loan expert wants to make your home buying journey a smooth one regardless of whether you started your loan application in-person or you applied for your mortgage loan online. Working together to avoid the roadblocks above (and talking early if any other questions come up) can help get you to the closing table on time and in your new home quickly. Give us a call at (866) 764-6552 or contact us in person for help.