Homeownership Series: The (Not So) Scary Loan Application
Now that you’ve finished your wish list, you’ve got a good idea of what you’re looking for in a new home.
You may be dreading what comes next (the loan process!), but there’s nothing to fear. We’ve compiled a few things you can expect to encounter along the way, and some items you should have ready to submit with your application.
How long does the home buying process take?
The entire process can take 30-45 days. The length of time depends on how quickly application information can be documented and verified, and whether you have already found a home or are just beginning to look for one.
What documentation is required for my application?
After applying for a mortgage, your lender will require documentation from you. This can include:
Income/Employment Information for the last 2 years
– Two most recent pay stubs along with W-2’s for the past two years
– If self-employed, income tax returns for the past two years
– Documentation regarding any other income source (retirement, annuity, SSI, etc.)
– Bank statements for the last two months
– Most recent 401K and/or IRA/Annuity statement (if applicable)
How much do I need for a down payment?
A down payment is always required when buying a home, though the amount required will depend on the type of loan. Don’t worry if you don’t have 20% to put down; there are several programs that work with buyers who have a smaller down payment such as FHA and Utah Housing. Be sure to ask your loan officer if these programs may be right for you.
What's the difference between a pre-approval and a pre-qualification?
A pre-qualification is sort of an informal agreement between you and your lender. The bank gives their opinion on how much they think they will be able to lend to you based on information that you have provided to them. The lender won’t do any credit checks or income verification at this point. Because this doesn’t consist of any formal applications, the lender can decide not to give you the loan if the info you provide is inaccurate.
A pre-approval is more official. With a pre-approved home loan, the lender will actually check credit history, employment information, assets and liabilities. This can take much of the worry out of looking and keep you focused on searching for homes within your price range. It’s important to note, however, that a pre-approval still does not guarantee you the loan, though the odds are more in your favor than without one.
What is involved in the closing process?
All of the loan and mortgage documents are signed at closing. You can request a copy of these documents as early as 24 hours before your closing, which will give you time to review them carefully and ensure that all of your questions are answered during the signing process. The closing process is usually handled at a title company, and they will handle the transfer of funds during this time as well.
What do I need to bring to the closing?
Any down payment and/or closing costs need to be paid at the time you sign your documents. Funds must be certified in the form of a cashier’s check. Regardless of the amount you are due to pay at closing, personal checks are not accepted.
Keep in mind that this is only a brief overview of what’s involved, and we recommend meeting with a mortgage professional to ensure all of your questions are answered. You can even request more information online. Once you’ve sat down with a loan officer you’ll have a better idea of your price range; and then the home search can begin. Before you get started, though, check back next week for some ways to avoid becoming ‘house poor’.
All loans are subject to approval, restrictions apply, contact bank for details. Zions Bank is a an Equal Housing Lender.