Home Buyer 101: The Dos and Don’ts of Lending
Here at the Kelly Blanchard Real Estate Group, we love for our buyers to be informed and equipped. If you, as a buyer, are wondering about the home loan process, you are not alone!
We brought in one of our fabulous local lenders, Gabe Corbett, Senior Loan Officer at George Mason Mortgage, LLC to share his wisdom and insight on the wide world of loans:
The American Dream – owning your own home – can be a very exciting time and is considered a milestone event, especially for first-time home buyers. To achieve this, most buyers also have a need for financing through getting a mortgage on their new home. Even for those looking to move up/trade up to a larger home, or downsizing for empty nesters, the thought of going through the underwriting process can be nerve-wracking as the industry is now more highly regulated than it has ever been. Prior to the “great recession” mortgage money was easier to come by and those who have not applied for a loan in the last decade will no doubt notice some changes.
Regardless of assets you can show a lender, or a having a credit score well above 800, most mortgage companies are now required to prove the “ability to repay” in order to issue a qualified mortgage, or a “QM.” Non-QM loans do exist, but typically the best rates and fees are through loans that can be sold on the secondary market.
Lenders now focus on the bigger picture of evaluating your income, assets, and credit in determining whether or not you will be able to qualify for a loan. The staggering numbers of individuals who suffered through foreclosures should be a reminder to all that the importance of getting educated on the process (know before you owe!) cannot be understated.
That being said, there is a decent amount of information available on the web related to different types of mortgages and accompanying guidelines, but how do you know which loan program is the right one for you?
A referral to competent and trusted mortgage professional is a good place to start. Establishing early on in the process some type of relationship with a lender who is willing to educate you on the process is important, so it is worthwhile to allow some time for this in the beginning. Allowing them to get snapshot of your financial picture and ask some pertinent questions can save you time, effort, money in the long-run, and avoid some unnecessary headaches.
The more a prospective lender knows about your specific situation, the better they can help you. Are you self-employed and do you have a sufficient history of receiving that income? Do you typically claim losses on your tax return to minimize your tax liability? Do you have any significant derogatory credit that prohibit you from qualifying? Your lender should help you with these questions (and more) and should help you find solutions to any challenges you may be facing.
It is important to keep changes to minimum during the loan process regarding your financial picture. Exceptions can be made, but in general it is important to:
- Not change jobs or become self-employed suddenly
- Not make large purchases including automobiles
- Keep your credit card balances stable, and keep your payments on time
- Sign on the dotted line for new credit even if for “no payments” for “X” period of time
- Not make any large deposits without first checking with the loan officer
- Not co-sign on any new loan for anyone else
- Not have your credit score pulled excessively
Navigating the loan process is doable, and by most people, but it helps to have a trusted advisor from the beginning!
Gabe Corbett, Senior Loan Officer