We’ve written this blog for you if:
- you’ve grown out of your apartment
- you’re tired of paying rent and watching it land in someone else’s pocket rather than your own
- you have no idea what goes into buying your first home
Let’s face it, anyone buying a home for the first time is in unfamiliar territory. So when looking to get pre-approved for a mortgage, many don’t know what questions they should be asking.
Here are 6 of the most important topics you’ll want to discuss with your lender to make the application process as smooth and stress-free as possible.
1. What information or documents will I need to provide when submitting my mortgage application?
By asking the right questions during the initial meeting with your loan officer, you’ll be able to expose potential challenges in your mortgage application up-front and before it does to underwriting evaluation. That will save a lot of hurried back and forth down the road.
You’ll need info on your marital status, credit obligations, history of residence, income and employment verifications, the potential down payment amount and other necessary documentation that an underwriter requires for full approval. There’s nothing more frustrating than getting close to being pre-approved only to find out that your lender needs to verify something you weren’t prepared for. Read up on what you need to prepare for pre-approval.
2. How long will the whole process take from start to finish?
Many factors go into getting a mortgage — like loan processing, underwriting, title search, home appraisal and more — and stumbling on any one of them can drag the process out. That’s why communication between you and your loan officer is essential. As long as all of the documents and questions are addressed ahead of time, any loan officer worth their salt should be able to give you a really good estimate on how long it will take to get pre-approved and then close on your mortgage.
Movement goes one step further with our unmatched 6-7-1 process.* Our goal is to have upfront underwriting completed within as few as 6 hours* of receiving your application.
Granted, this timeline can be impacted by a few things: how quickly you turn in all the documentation, holidays and the time of day you submit your application.
Then we aim for 7 days for complete processing of the loan and 1 day for closing. We should talk if you’re concerned that another mortgage company’s process might take too long or be problematic. Learn more about our 6-7-1 process.
3. How exactly does my credit score affect my interest rate?
This may be the most critical question, especially if there have been any recent changes to your credit report or outstanding concerns about your credit history. Many things can influence a blip up or down in your credit score and if your score is a little shaky, you should take steps to improve it before applying for a mortgage.
Be honest with your loan officer and let them know about issues up front — believe us, nothing surprises them, and they can honestly tell you if your unique situation will impact your interest rate in any way! The good news is that you don’t need a perfect credit score to get a home loan. Depending on your situation, several home financing options are available. Here’s everything you need to know about your credit score.
4. How do I lock in an interest rate? How long can I lock it for?
Combined, our credit score, credit history and all the documentation you’ve provided will determine the best loan product for you and the interest rate the lender is willing to offer on the amount you wish to borrow. But it’ll be up to you to lock in an attractive interest rate. Your loan officer will pay close attention to market conditions and will run the numbers with you to try to get you to a point where you feel good about the interest rate offered, but you’ll want to be clear on what the process is for locking in a good rate when you find one, especially since rates can change throughout the day.
The rule of thumb is the shorter the lock period, the lower the interest rate. Typically, mortgage rates come with a 30-day lock. Conversely, the longer the lock period is, the higher the interest rate. That makes sense because you’re asking the lender to reserve money for you at a rate they may not want to offer 60 or 90 days down the line. We recently wrote a well-received blog on interest rate locks.
5. Are property taxes and home insurance included in my monthly mortgage payment?
Some future first-time homeowners budget themselves for a mortgage payment that only covers the principal and the interest. The truth is that there’s often more packed into that payment than meets the eye and the answer to this question affects not only how much your total monthly payment will be, it also impacts the total amount you’ll have to pay in one lump sum at closing. When you include taxes and insurance, you’ll have to make a higher payment every month, but you won’t have to worry about coming up with large sums of cash to pay the taxes when they are due, which in some regions of the country can be pretty substantial.
The other thing to consider is how malleable your monthly payment will be. Most new homeowners choose fixed-rate loans, which means your interest rate and the combined monthly principal and interest payment don’t fluctuate for the life of the loan. But your total monthly payment isn’t set in stone: local property taxes, homeowner’s insurance and mortgage insurance can increase or decrease over time. If these things are included in your monthly payment, you may also see it go up or down. Learn about PITI – the four things that make up your mortgage payment.
6. How much will I need for closing?
Typically in the mortgage industry, if a lender is willing to lend you the money to buy a home, they should send you a “Good Faith Estimate” within two days of receiving your application (although we aim to have a response back to you within 6 hours!) This letter will help you financially prepare for closing. It’s good to remember that the Good Faith Estimate is what it says it is — an estimate.
The final closing costs may be slightly higher or lower because your circumstance may require more processing time, a prolonged title search or other factors affecting third-party fees. Regardless, the Good Faith Estimate shows that you’re on your way to home ownership and gives you a general budget target to aim for to cover closing costs. Here’s what you can expect to pay in closing costs.
The more you understand the loan process, the better your experience will be.
The 6 questions outlined above are an excellent way to get ready to work with a Movement Mortgage loan officer and show them that you’re serious about owning a new home in 2023. Ready to chat with one of us now? Find a local loan officer in your area who can help.