Mortgage Lenders have been working hard to improve speed in closing loans. Adding staff and improving technology have helped lenders tackle the spike in refinancing demand triggered by low mortgage rates. You can help your lending team move your loan to your closing date. Rest assured, a little prepping and planning can go a long way. Here are a few actions you can take to help you simplify that loan process:
Know Your credit Scores Ahead of Time
Make sure to check all three major bureau credit scores before contacting any mortgage lender. This gives you the opportunity to do any credit repair work, including correcting any errors and being ready with letters of explanation, if your lender needs them. It also helps your loan officer know your eligibility for certain loan programs. Conventional loans may require a FICO score above 740 for best pricing; many of the homeowner refinance assistance programs, such as the FHA Streamline refinance or HARP, for example, may permit lower scores.
To learn more about how to protect your credit score, check out PennyMac's previous blog, "Ten Ways to Protect Your Credit Score for Mortgage Application."
Gather All Documents Sooner, Rather Than Later
Borrowers are often required to provide significant paperwork when qualifying for new loans, including: tax returns, pay stubs, and statements of outstanding debts and assets. If you're refinancing, you'll need copies of your homeowners insurance. Gathering all of this paperwork last second can leave even the most experienced procrastinator in a tizzy. So, we suggest collecting these documents ahead of time. This will allow you to more quickly and easily fill out and submit your loan application. And, it will help your lender get a more accurate picture of your financial health from the get-go.
Respond Promptly to All Requests
While processing and underwriting your loan request, your lender may ask for additional information. They may have questions regarding a gap in employment history, a maxed-out credit card, or a sudden drop in income. No matter the query, try to respond promptly. Remember, lenders need to clear up any uncertainties before they can commit to lending you a mortgage.
Honesty is the Best Policy
Perhaps one of the most important ingredients to shortening the loan process is – accuracy. Omitting parts of your employment history, excluding open credit card accounts, and fudging past debts will not help you secure a better interest rate or loan. In fact, it will only add to the complexity and elongate your processing time. Remember, lenders will verify all information submitted via loan application. They want to be certain that your financial profile is true and accurate. This will help them successfully determine the best loan for you and your lifestyle.
Completing the loan application process can be intimidating at first glance. But, if you're prepared beforehand, you can save yourself a great deal of grief. So, make sure to:
- Know your credit scores ahead of time
- Gather all documents sooner, rather than later
- Respond promptly to all requests
- Be honest with your information
Taking these actions can ultimately help you simplify the loan process and help you get the keys to your new home a little sooner.