FINANCING YOUR DREAM HOME
Six steps to obtaining a mortgage, surprising credit tips
House hunting is exciting. Getting a mortgage can be taxing. Buying a mortgage is intimidating. The amount of paperwork alone is enough to overwhelm even the most securely rooted person. My wife and I recently found our dream home with the help of Dawson Jordan, real estate agent with the Mike Lombardo Team in Cape Coral. It was a quick and painless experience; looking at three and choosing the perfect one.
Getting a mortgage was more difficult. I originally tried to go through my bank, but I quickly realized I was not a priority to the behemoth institution. Dawson suggested we use Traci Mendolera of Cape Coral Mortgage. Within a few hours of contacting her via email, she had my loan package rolling. Within 24 hours we were preapproved and had an inspection scheduled. In a matter of weeks, we were well on our way to a closing date. Traci told me that most borrowers find the mortgage-buying process difficult. “Being overwhelmed by the mortgage process is a huge challenge for buyers,” Traci says, one reason being that “lenders now require full documentation―all income and assets must be proven with documentation and paper trails.”
I asked Traci to break down the mortgage process in as few steps as possible. She lists the following six steps:
SIX STEPS OF THE MORTGAGE PROCESS
1 Get pre-approved before you begin house hunting. It’s advantageous to go through a local lender, like Cape Coral Mortgage, because it’ll give you an advantage over other offers since they will be aware of the unique challenges to the specific area in which you’re looking to buy. 2
Be educated on property taxes and insurance rates in the area you’re buying before you make an offer. You must qualify for the mortgage based on monthly principal, interest, taxes and insurance. 3
After you make an offer, immediately call your loan officer to complete a loan application. This will take some time, so be patient. There’s a lot of behind-the-scenes work that goes into this step, including inspections, appraisals and title work. 4
The underwriter will ask for additional items or conditions. Respond quickly on this and don’t take it personally. Some of the requested items will be justifications for financial decisions that are sometimes uncomfortable to answer. These answers are necessary to secure your loan. Delays at this stage could push back your closing date.
5 Once conditions are all cleared on your file, you will be issued a “Clear to Close” letter. 6
Finally, you will be given a Closing Disclosure a few days before closing. This tells you the final amount you must wire to the title company for closing.
CREDIT SCORE
How the three reporting agencies develop your score is multifaceted. The basic principle is pay your bills on time, and your score will be good. However, a person can pay their bills on time and still have a low credit score. That’s because the number of accounts you have and the number of times you request credit (inquiries) affect the overall score. According to Bankrate.com, 65 percent of your score is comprised of how much you owe and your payment history. Traci recommends a score no lower than 620 if you’re trying to purchase a mortgage. Traci also warned against paying off debts. “Contact your loan officer first,” she says, “They can run a credit simulator that will provide specific steps to your situation on how to improve your score.” For me, this was true. Traci determined that I needed to purchase a different type of loan, putting less money down, and use the savings from the smaller down payment to pay off my car. I was able to buy a home and pay off a large debt all at once.
YOU SHOULD DO THESE THREE THINGS TO KEEP YOUR CREDIT SCORE LOW:
1 Pay your bills on time. 2
Keep balances on credit cards low (under 20 percent of your overall spending limit is what creditcards.com recommends). 3 Request credit sparingly.
Good luck buying your dream home and obtaining that mortgage. Be patient. Be responsible. Remember it’s a home for you to enjoy life. Kyle Doty is a middle school educator in Lee County. He has published one book of poetry with Loyola University’s Apprentice House and has another forthcoming.