It's more complicated than it used to be
What You Should Know About Mortgage Paperwork
by Scott Sheldon
How Not to Become House Poor
The Economics of Buying a Home
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Getting a mortgage is every bit as arduous as you might think. While lax mortgage lending standards helped pave the path to the financial crisis a few years ago, the pendulum has swung so far the other way in 2017 that getting as simple as a 30-year fixed rate loan is incredibly complex given the amount of paperwork and disclosures required.
Here is what you should expect if you plan to buy a home in 2017 or beyond.
What this means to you, as a homebuyer, is to trust your lender and expect the mortgage process, in terms of the paperwork, to be thorough. The mortgage process could be compared to an airplane ride. No ride, destination, flight attendant, captain or any aspect of each individual flight is the same. Every flight is different.
Every loan is different as well. If you have ever been on a flight and experienced turbulence, that turbulence is the equivalent of a lender coming back and asking you for documentation, even though you already provided it at the beginning. Asking you for documentation a handful of times is normal.
Remember that a good lender can do a thorough job examining your financials before you go house hunting. This will ensure you can get a loan at a good rate while intercepting future issues that may arise. Before you go to a lender for pre-approval, you'll want to check your credit scores to see if there are any issues or errors weighing down your scores that you can quickly fix. You can get your two free credit scores on Credit.com.
Time is not on your side when purchasing a home for two reasons. You might have a fee for every day you don't close on time, which could be as much as $100 per day. If you close three days late, that's $300 in the seller's pocket. The other reason is your interest rate lock. If you don't close on time, it might cost you as little as $500 or as much as a few thousand to extend your rate lock commitment to the investor.
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Time is also not on your side because your lender and realtor expect you to provide documentation to them within 24 hours. This means your answer to the request for a paystub made Monday is expected by Tuesday, no later than Wednesday. Delays in the process can be costly and stressful, especially if everyone is counting on the transaction to close by a certain day and it doesn't due to failure to receive documentation in a timely manner.
The two things you can do for yourself when purchasing a home include getting the needed documentation to your professional in a timely manner and expecting to be on call for each day of your 30-day purchase contract. Going into the transaction with those expectations up front will help ensure your transaction closes on time.
Scott Sheldon is a senior loan officer with Summit Funding and consumer advocate in Petaluma, California. His work has appeared in Yahoo! Homes, CNN Money, MarketWatch and The Wall Street Journal. Connect with him at Sonoma County Mortgages. Find more by Scott Sheldon here.
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