Securing Mortgage Approval

By John Rives

Many people are taking advantage of the record low interest rates to purchase a new home. However, a lack of understanding of the loan process and what is required can cause delays in procuring a mortgage, or worse, being turned down due to failure to supply the financial documentation requested by the underwriter.

mortgage applicaiton

In the past it was necessary to have excellent credit, a large down payment and stable employment with sufficient income to support your total debt payments to guarantee a loan approval. These days you must have a borrower profile that meets the credit underwriting guidelines for the loan you are requesting. And, you must be able to produce all hard-copy documents requested by the underwriter.

Once you have chosen a lender, they will supply you with a list of all the documents you must submit in order to secure the loan. They will ask for information such as your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses, etc.). The lender will run a credit check to determine your credit status, but you will have to supply additional documentation such as paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance, and other documentation.

Those who enter the mortgage approval process ready to battle their chosen mortgage lender will come out with a nightmare story to tell. As the process, requirements, and guidelines are the same for everyone, your mindset makes the difference. Be prepared to provide all the requested documentation necessary for lender approval in a timely manner and your loan approval process will be faster and much less stressful.

Processors and underwriters are the people trained and charged with gathering your required financial documents, and then approving your loan. The process begins with the loan originator (a.k.a. loan officer, mortgage consultant, mortgage adviser, etc.) who is tasked with matching the qualifications of a particular mortgage deal to the appropriate underwriting guidelines. It is the loan originator’s job to determine if a loan scenario is approvable and to gather the documentation to support that determination. This is the most important part of the loan process and will determine whether you can qualify for the mortgage you have chosen. The rest of the approval process is just producing the necessary requested documentation.

In the end, it all comes down to your being able to provide hard-copy proof that your financial picture matches the necessary guidelines for your loan. If the lender asks for a specific document, give them exactly what they are asking for, not what “should be OK,” -because it won’t be. When the lender asks for specific documentation and the borrower supplies something else, the entire process can take a bad turn and be delayed, or worse, the lender can decide not to approve the loan. So if the lender asks for a bank statement which contains five pages, send them all five pages, and not just the summary. If you send them the summary page and they ask again, don’t complain that the lender keeps asking for the same thing when you did not send them exactly what they asked for in the first place. This may sound like simple logic, but the vast majority of mortgage approval process woes stem from scenarios similar to this one.

A common mistake that many people make when relocating to a new area is packing up all their personal and financial files, bank statements, and other credit information so that they cannot easily provide necessary hard-copy documents during the loan approval process. If you are going to be packing your belongings before your loan has been approved, make sure to keep all of your financial files easily accessible as you will undoubtedly need at least some of them to procure your loan.

One of the best approaches to streamlining the mortgage approval process is obtain a list of all the documents needed for the underwriters from your lender and have them scanned and ready to go before the process starts. Being prepared to provide redundant and detailed financial and personal documents required by mortgage underwriters will make the loan approval process faster and easier for everyone involved.

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Financing Your New Home

Once you’ve decided to buy a new home, there are a number of things you need to do before looking at houses. In order to make an offer on a home, you need to be pre-approved by a mortgage company for the amount of your offer or higher. Whether or not you can get pre-approved for the loan amount you need will be partially based on your credit rating. Checking your credit score, and correcting any mistakes, is an important first step in getting the best interest rate on the mortgage for your new home.

The three credit bureaus are required to provide individuals a free copy of their credit score once every 12 months. Visit to view your credit score and to get information on how to file a dispute if you find a mistake. Taking care of any mistakes in your credit score before applying for a loan or looking for a home will save time and help you move through the process much more quickly, without any unpleasant surprises.

Once you have your credit report, and have fixed any errors, it’s time to shop for a loan. First and foremost, you must determine how your mortgage payment will fit your current budget and, to some extent, your future obligations 15 to 30 years down the road. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which can be more than you can afford. It’s up to you to take stock of your income and expenses, both current and projected, to determine what you can comfortably manage each month.

Along with your mortgage payment, don’t forget to include related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment. Use the McKee Homes loan calculator to get an estimate of your monthly payments including mortgage, insurance, and taxes. It’s not accurate to the penny, but will give you an approximate monthly payment based on the loan information you enter in the input fields.

There are many different types of loans available so it’s a good idea to know which type of loan will work best for you.

Conventional Mortgage. This is the most commonly used type and usually has the best rates.  You’ll typically need at least 10% of the purchase price for a down payment and good credit.  A conventional loan can be for 15 or 30 years.

FHA Mortgage. Thought of as the first time home loan program but is actually available to anyone and is more forgiving of lower credit scores. Includes a government charged funding fee of 1.75% which must be paid up-front. This amount goes back onto the loan amount after the buyer makes a 3.5% down payment. There is also a 1.25% annual fee for mortgage insurance on this loan. The interest rates are not as attractive as a conventional mortgage, but qualifying for the loan isn’t as tough either. Not all lenders can offer FHA Mortgages.

VA Loan.  Zero down payment loan. You must be an active duty military service member or a veteran to qualify and a certificate of eligibility will need to be granted. VA loans include an upfront charge of 2.15% VA Funding Fee for first time use and 3.3% VA funding fee for multiple use.

USDA Rural Housing Loan. Zero down payment loan.  The USDA mortgage loan can only be used in designated areas and towns, but their definition of rural is fairly flexible. You will probably need to ask your lender if a particular home or area qualifies for a USDA loan.

Adjustable Rate Mortgage (ARM). These have rates that start out lower than the current rates, but can change after one, two, or five years – usually upward! Many home owners got into trouble when their rates went up faster than expected on their adjustable rate loan.

When you are ready to shop for a loan you can choose between direct lenders and mortgage brokers.

Direct lenders have money to lend and make the final decision on your application. Brokers are intermediaries who, like you, have many lenders from which to choose. Lenders have a limited number of in-house loans available. Brokers can shop many lenders for each lender’s available loans. McKee Homes’ preferred lender is SunTrust Mortgage, Inc. who provides excellent home financing services, competitive pricing, and local processing and decision-making.

In addition to choosing the source of your loan, you’ll also have to check on loan costs, including the interest rate, broker fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, application fees, credit report fee, appraisal and others. Ask your lender for a list of all the fees and terms of any loan you are considering so that you know all the costs and make intelligent comparisons between loans. Download our First-Time Home Buyers overview for a step-by-step guide to the mortgage process.

Once you have chosen a lender, they will supply you with a list of all the documents you must submit in order to secure the loan. They will ask for information such as your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses, etc.). The lender will run a credit check to determine your credit status, but you will have to supply additional documentation such as paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance, and other documentation. If the lender deems you creditworthy, they will likely hire a professional appraisal to make sure the value of the home you wish to buy matches the asking price.

Knowing the process involved in obtaining a home loan, can help you be prepared, so when you find the home of your dreams, you won’t miss out on the opportunity to put in an offer and get the loan you need to finance your new home.

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How To Prepare Your Home For Sale

Have you found the perfect new home but need to sell your current house first? This is a common situation many people find themselves in for one reason or another.

While you will need to repair or disclose any large problems with your house, there are many low cost improvements you can do yourself to make your home more attractive to potential buyers. If your house looks well cared for, buyers are likely to assume that what they can’t see has also been maintained.

Plan on spending some time to give your house curb appeal and improving the “wow factor” when potential buyers walk in the front door for the first time. The time and money spent sprucing up your house will be more than worth it as it will help sell the home faster and for a higher price.

How To Prepare Your Home For Sale

The Exterior

  • A well-kept lawn makes a great first impression. Spruce up the lawn by mowing, trimming, weeding and removing all yard clutter.
  • Trim your trees and bushes, as well as weed and apply fresh mulch to flower beds – it gives a fresh and maintained look for a low cost. Plant colorful flowers in places that could use some brightening.
  • Apply a fresh coat of paint or stain to wooden fences, or power wash PVC fencing.
  • Power wash home’s exterior, driveway, walkway, patio and deck.
  • Consider repainting the house if the exterior paint looks old, faded, or is peeling. You will need to clean the exterior of your house before painting, so power wash first as sometimes that is all that is needed to make the exterior of the house look new again.
  • Repair any cracks in the driveway, walkways, or patios.
  • Ensure all gutters and downspouts are firmly attached, clean of debris and functioning.
  • Clean windows inside and out – make them sparkle.
  • Make sure your house numbers are easy to see, and consider getting new ones if it would improve the look from the street.
  • Make sure the front door looks good and operates smoothly. Replace the lockset if necessary, replace any damaged or old weather-stripping, and repaint or re-stain if necessary.
  • Buy a new welcome mat and make sure the front porch is clean and free of clutter.
  • Place potted flowers near the front door. Bright colors can invoke a positive feeling about your home.

The Interior

  • Pack up everything you can get by without, such as personal belongings and furniture. Rent a storage unit if necessary. This will make your house seem larger and allow prospective buyers to imagine their belongings and furniture in the house.
  • If you plan on taking any window coverings, built-in appliances or fixtures with you, such as a special chandelier in the dining room, remove them before showing the house. This will eliminate any disappointment or hard-feelings from potential buyers which could cost you the sale.
  • Thoroughly clean every inch of your house, especially kitchen, bath, and laundry areas.
  • Repair any cracks, holes, or other damage to walls, doors, and moldings.
  • If necessary, paint dingy, soiled or strongly colored walls with a neutral shade of paint, such as off-white or beige. The same neutral scheme can be applied to carpets and linoleum.
  • If carpeting is in good condition and neutral in color, have it cleaned. If not, replace it. Off-white carpet is best; this makes the rooms look larger and cleaner. If replacing the carpet pad, select a very thick one, and then install a modest grade of carpeting. The feel will be plush and expensive without the high cost.
  • Clean or refinish wood floors. Wash and wax vinyl flooring.
  • Make sure all doors operate smoothly and locksets work easily and latch properly.
  • Replace or repair any leaking or dripping faucets.
  • Replace cabinet hardware if it looks old or worn.
  • Thoroughly clean and power wash the garage floor, and remove anything that doesn’t need to be there. Clean any cobwebs and dust from walls, windows and ceilings. Make sure the garage door operates smoothly and replace light bulbs with the brightest bulbs your fixtures allow to add more light.
  • Be aware of odors from cooking, smoke, and pets. This can be a major issue for prospective home buyers. Air out the house, use deodorizers, and have your carpets and furniture cleaned.  Air out or dry-clean your drapes.

staging the interior of your home

Staging Your Home

  • Do whatever you can to stage your home to make it look attractive to potential buyers. Study magazine ads, furniture showrooms, and websites such as Pinterest to see how small details can make rooms more attractive and appealing. The effect of a vase of flowers, an open book on the coffee table, a basket of birch logs by the fireplace, etc., can make the difference in a room.
  • Replace mats or rugs for areas in front of sinks and in the laundry room.
  • Keep a set of nice new towels handy to put in bathrooms while showing the house.
  • Move or remove any furniture that blocks the flow of the rooms.
  • Make sure all window coverings are hung level and leave all shades and curtains open with lights on while showing the house.
  • If you have a small or narrow hallway, consider hanging a mirror to make it appear larger.
  • Use plastic bins or cardboard boxes to store kid’s toys and other personal items under beds while showing the house.
  • Keep all counters, tables and desks clean and free of clutter. Hide soap, sponges, and garbage cans under sinks while showing the house.
  • Remove off-season clothing from all closets, especially in the entry, and clean and organize them as potential buyers like to inspect closets and this will make them appear larger and more inviting.
  • Recent studies have shown that humans have strong, positive responses to certain smells. Cinnamon, fresh flowers, bread or cookies baking in the oven are all excellent ways to enhance your property for sale in the minds of potential home buyers.

By properly preparing your house for sale, you allow prospective buyers to visualize the home as their own and greatly improve your chances of selling the home faster and for a higher price.

By John Rives

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Furnishing Your New Home

Now that you’ve purchased a new home, it’s time to add your personal touches and set the style of your home with personal belongings and furnishings. Your home furnishings are a reflection of your personal taste and expression but they can often be very expensive. Having to spend a lot of money on new home furnishings just after purchasing a new home can be a frustrating and stressful experience. However, if you do some research and are willing to take your time, you can make it the exciting and enjoyable experience that it should be.

Initially, you may need to keep the furniture and other furnishings from your old house so that you can develop your new home furnishing one room at a time in order to spread out the cost over a longer period of time. You may also want to refurbish some of your existing furniture to match the style of your new home instead of buying new furniture right away.

If you have the time, you might want to visit yard and moving sales. It’s sometime possible to get very high quality furnishings at incredibly low prices at moving sales. There are also many online sources such as Craigslist and other online classified listings where you can shop for what you need at very affordable prices.

You can also get great deals on floor samples at furniture stores, especially during the summer months when most stores are turning over their inventory. Pieces of furniture that get a lot of use such as couches and beds may be worth buying new as they will last much longer and hold up better to continual use. If you find a piece of furniture that you really have to have, you can ask the store manager about purchasing the floor sample and often get a greatly discounted price.

For people who relocate often for business, or are in the military and may be transferred every few years, renting furniture can be a great option. It can save a lot of money up front, but also make moving much simpler and less expensive as you won’t need to take all of your furniture with you each time you move. Even if you plan on staying in your home for a long time it might be worth renting at least some of your furniture until you can afford to buy the pieces you want. For a small monthly fee, you can rent-to-own or just rent temporary pieces until you can afford the new furniture and furnishings to finish out your new home exactly the way you want.

By John Rives

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