When considering buying a home, you must undergo the mortgage application process. This process can be lengthy and particularly hard for first-timers as they tend to feel they’re stepping into an unknown journey. While there might be much to do, knowing what the process is will make the journey shorter and less overwhelming. Keep reading to understand the mortgage application process.

Gather All the Necessary Information

The first thing you should do is to ensure you have gathered all the essential information needed. Start with personal identification. The lender will need to confirm your identity and your Social Security number. They need your SSN to review your credit history and determine your eligibility for a loan. In the application, you’ll also need to indicate your citizenship, marital status, contact information, and number of dependents.

Proof of Income

You’ll also need to provide information about your employment or income. To back up this information, you need to submit tax returns, pay stubs, profit and loss statements, and W-2 or 1099 forms. If you’re employed, you may have to provide your employer’s name and contact information, plus your start date. In case you receive child support, alimony, VA compensation, unemployment and disability benefits, and other forms of income, provide documentation proving this.

Financial Records

Prepare your financial records as your lender will require them. This includes your bank accounts, cash value life insurance, investments, business equity, retirement accounts, real estate investments, assets, etc. In terms of assets, you have to provide information about their market value. If you have liabilities, you will be asked to provide information about unpaid balances and monthly payment amounts. If you own real estate investments, the lender will want to know the property value. And if it’s an investment property, they will also want to know the monthly expenses you incur and the rental income you receive.

Miscellaneous Documents

Depending on your circumstances, the lender might need other documents from you. For instance, if someone gave you funds for the downpayment as a gift, you will need to submit a gift letter highlighting who this person is and how they’re related to you. And if this is the first time you’re buying a home, the lender might ask for proof of on-time rent payments.

Mortgage Application Tips

Talk to anyone who has gone through the mortgage application process, and they will tell you that preparation is critical. Aside from ensuring you have all the proper documents, there are several things you can do to facilitate a smooth application process. Here they are:

• Compare offers: Talking to various lenders is always a good idea. Find at least three and compare their rates and fees. Choose the one that suits your needs the most.
• Maintain your job: Unless it’s necessary, don’t quit your current job and start a new one while processing your mortgage application. Certain lenders might deny your loan request because your employment situation has changed.
• Ask about rate lock: You can secure a low rate by locking in your rate. However, ask how long the rate lock will last and whether any fees apply.
• Avoid large purchases: Large purchases can be a red flag to specific lenders. They’ll be concerned about your ability to repay the loan. Try to avoid making any large purchases. In addition, avoid missing a debt payment or opening a new line of credit, as it will affect your credit history.

A mortgage application can feel manageable. As long as you know what lenders require from you, you’ll have an easier time. The key is being prepared and organized.