Choosing a Mortgage Company

When you are ready to shop for a loan, you can work directly with a lender or with a mortgage broker representing many individual lenders. Direct lenders are lending their own money, have in house programs and make the final decision on your application. Mortgage brokers are intermediaries who represent many lenders and loan programs from which to choose.

If you have special financing needs or want to shop the market for the best deal, an experienced broker may be able to find the best loan for you.

Along with shopping the source, you’ll also have to shop the total cost of the loan, including the interest rate, fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, and a host of other items.

Your Initial Meeting with a Mortgage Professional

The loan approval process generally begins with an initial interview where you and the mortgage professional meet to discuss the potential loan. You will need to bring information to verify your income and long term debts.

You may prefer to meet with the mortgage company before house hunting to determine in advance how much you can afford and the mortgage amount for which you can qualify. This step is called pre-qualification and can save you time and trouble by making certain you are looking in the correct price range.

To complete the 1003 Mortgage Application, you will need to gather:
A purchase contract for the house (if you have one)
Your bank account numbers and the address of your bank branch, along with checking and savings account statements for the previous 2-3 months
Pay stubs, W2 withholding forms, tax returns for two years, or other proof of employment and income verification
Credit card bills for the past few billing periods, or canceled checks for rent or utility bill payments, to show payment history and amount of revolving debt
Information on other consumer debt such as car loans, furniture loans, student loans and retail credit cards
Balance sheets and tax returns, if you are self-employed
Any gift letters, if you are using a gift from a parent or relative or other organization to help pay the down payment and/or closing costs. This letter simply states that the money is in fact a gift and will not have to be repaid.
Having these items on hand when you visit the mortgage company will help speed up the application process. Usually an application fee and the appraisal fee will have to be paid when you submit the mortgage application. After the initial meeting with the mortgage company, you should have a general idea if you qualify for the size and type of loan you want. After the mortgage application, the mortgage company should let you know if you qualify for the loan within days.

Speed Up the Mortgage Process

Once complete, your application will be given to a processor in the mortgage company who will organize your paperwork and may verify your employment, bank balances, and other information.

Be sure to respond promptly to requests for information while processing is taking place.

Commonly requested items during processing that may not have been collected during the application include:

The final purchase contract for the house (if applicable).
If you’re self-employed, the mortgage company may require your personal and business tax returns for the previous two years and your company’s year-to-date Profit and Loss statement.
Divorce settlement papers, if applicable
Updated account statements for listed assets in the application that may have changed in value.
Information about debts or credit report items that may have been delinquent or not accurate.
Evidence of your mortgage or rental payments, such as canceled checks.
An irrevocable gift letter if you are receiving a monetary gift from a relative.
The processor is collecting this information before presenting it to an underwriter. An underwriter reviews all the information in your loan file to determine if the application meets the lender guidelines. With approval, a lender should give you a letter of commitment, which is a promise from the lender to make a loan based on specific terms and conditions.