When it comes to lifetime markers getting a first mortgage is a major event. With a mortgage you’re magically transformed from occupant to owner and from tenant to titleholder.
Applying for a mortgage used to be seen as a battle of sorts, a competition where the only winners were those who sold headache remedies and paper by the truckload. But now finding the right mortgage is faster and easier than ever — but only if you know how to make the system work for you.
If you compare loan applications today with the ordeals of even ten years ago you can see a marked difference.
It used to take days if not weeks to obtain a credit report. Meanwhile a mortgage lender could not act on a loan application because information regarding debts and credit history were simply missing so loan processing times have been greatly compacted.
In 1995 both Fannie Mae and Freddie Mac said local lenders should use the credit scoring system developed by industry-pioneer Fair Isaac to evaluate consumer credit. With credit scoring, a rigorous mathematical profile drawn from a huge number of credit reports is used to measure credit history — and thus predict future credit behavior. Credit scoring benefits borrowers because it measures how credit is handled, not how much income is earned. You can be rich and have low credit scores; conversely you can be poor and have excellent credit. In practice, the higher your score the lower your rate.
The underwriting system itself has been automated. A conditional lending decision can often be made within an hour of receiving an application.
Despite the growing use of computers, the fact remains that borrower participation is still required.
Essentially your job is to make sure lenders have application information which is complete and correct. If there are errors in the application you may suddenly face expensive and steeper mortgage costs.
Your lender will supply you with a preliminary loan application showing income, assets, debts and required monthly payments. Much of the application is produced electronically from information received by credit reporting agencies — but before signing anything go through this application line-by-line to make sure all data is current and correct.
Since you know the lender will be providing an application for your review, you can speed the underwriting process by preparing your financial data in advance.
You want to have a file where you keep such things as your last two or three pay stubs and copies of your tax returns from the past few years. Also keep information regarding other sources of income such as interest, dividends, profit-sharing, etc. along with a few months of bank statements.
You now have a way to zip through a loan application — and you have a way to make sure that lender decisions are not being made on the basis of information which is out-of-date or factually incorrect.
If you have any additional questions about the mortgage process, call Keystone Mortgage at 865-909-0211. Providing Tennesseans with the best mortgage experience, period. So what are you waiting for? Get that dream home and apply here now.
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