Tips to Prepare Your Buyers for the Mortgage Process
Before you spend countless hours helping your buyers search for the perfect home, it’s a good idea to advise buyers to get pre-qualified from a lender first. From the time the borrower applies for a mortgage to the day they close, their financial management decisions can impact whether they are approved or denied. It may sound intimidating, but with some simple financial discipline your buyers can be better prepared for a smoother mortgage process.
- Secure the funds for the down payment and closing costs as early as possible. If your buyer is waiting on a tax refund, adding a part time job, or receiving a gift from a family member for their down payment and closing costs, extra documentation could be involved. It’s important to inform your lender where these funds are coming from so that they can guide the borrower regarding the documentation that will be required, according to their source of funds. Ideally, it’s best if the borrower can secure their funds between 60 and 90 days prior to applying for a mortgage so that any funds already in their bank account will be considered “seasoned” and would not require additional documentation.
- Avoid taking on new debt. Making large purchases such as furniture, cars, or opening new lines of credit or loans, can deplete the cash reserves that may be needed for the down payment or closing costs. Opening new credit cards or co-signing on a loan can cause inquiries on the borrower’s credit report, which can result in a lower credit score. Not to mention, the additional debt accrued could cause the borrower to exceed their allowable debt-to-income ratio required for the loan type.
- Avoid paying bills late or missing payments. Late or missed payments can cause dramatic hits to the borrower’s credit score and possibly make them ineligible for some loan products. Stay safe and advise clients to continue to pay their bills on time. Setting up automatic payments can help streamline this process.
- Avoid major employment changes during the loan process. Lenders verify the borrower’s ability to repay the loan based on their income which, in most cases, comes from their employment. Verification of employment can occur multiple times during the loan process. Usually, verification occurs at loan application time then again just before closing. Your client should consult their lender if they are planning on changing jobs, switching from salary to commission, or retiring during the loan process so that they can be informed of the effects these changes may have on their loan application.
For more tips to help your client through the loan process or to request a co-branded borrowers’ checklist & tips flyer that you can share with your clients, contact your Ameris Bank mortgage banker.
Marlene Sheard is a mortgage marketing representative for Ameris Bank and previous sales and marketing president for her local Home Builders Association. She enjoys sharing her experiences for the buying, selling, and financing of homes.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All loans subject to credit approval.