Pre-Mortgage FAQs
Before you even get started on your mortgage journey, you’ve got some questions.
Good news - we have answers!
What do I do first?
So you’re ready to start the mortgage process? First of all, congrats! The best first step is to reach out to a mortgage lender to get a good understanding of your financial picture.
There will be information to share, documents to collect, and questions to answer - but the first true step is to reach out and signal you’re ready to begin. As mortgage lenders, we’ll walk you through everything you need.
Here's a quick and simple script you can use:
“Hello! I’m currently planning to buy a home in the next [TIME FRAME]. I’d like to get a clear picture of my budget and what I can get pre-approved for. What information would you need from me to get started? Any other next steps I should know about? I look forward to working with you on my mortgage journey. Thank you!”
Even easier - contact us now!
How do I prepare for a mortgage?
If you’re wanting to buy a home in 1-2 years, the best way to prepare is to have a good understanding of your starting point.
Reach out to a lender to get an accurate look at your financial situation, ASAP.
A good lender will help you map out an action plan based on your starting point and your goals, and your timeline. Some things take time, so starting earlier rather than later can only help you.
What is most important to keep in mind for a mortgage journey?
One thing, above pretty much anything else, will set you up for an exceptional mortgage experience.
It’s not a large budget. It’s not even time…. It's communication.
Your mortgage lender is on your team, we want to see you succeed and be financially confident along the way! As long as you’re communicating any updates that take place, questions that come up, and promptly respond to any requests, your mortgage journey should be stress free and simple.
As mortgage lenders with decades of experience, we’ve seen it all. We can handle any bumps in the road with relative ease - but only if we know about them. So as long as you stay in contact, you’ll have an amazing journey!
What’s a high level picture of the mortgage process?
(You can also check out this graphic here.)
Once you know you’re ready to start the mortgage process and you choose a mortgage lender to initiate contact with - there are 8-ish steps, or milestones, along the way before ending at the closing table with your new title of “homeowner”. (All lenders might handle the process differently, but the main points are the same.)
#1 - Share some basic information
This might happen via an online survey or over the phone. You’ll answer some simple questions to let us know your starting point and your overall home buying goals.
#2 - Gather documents
After you share your information, you’ll provide documentation to verify everything. (Note: Some lenders wait to deal with documentation later in the process - however we chose to do it early because we’ve found it makes the rest of the process so much smoother and easier.)
#3 - Pre-Approval
A pre-approval shows a realtor and a seller that you mean business when it comes to buying a house. You’re not just talking the talk, you’re walking the walk with a pre-approval letter in hand.
#4 - Find your home
That’s right, finding a home to buy is step number FOUR in the process. We suggest working with a trusted real estate professional to search for the ideal home in the market for your needs. (We have awesome partners if you need a referral too!)
As always, stay in contact with your lender along the way. Send updates on specific houses that you’re interested in to see how those specific numbers would pan out for your budget.
(Note: Some homebuyers start here, it’s true. When that happens we’ve found there’s an extra level of “hurry up and wait” for everyone involved which adds stress to the process. Looking at houses without knowing your financing options leads to an increased chance of disappointment. We don’t want that for you, which is why we suggest starting with the numbers.)
#5 - Finalize your loan application
Once you find your home and have an offer accepted, you’re able to finalize some paperwork to send your loan to underwriting.
#6 - Underwriting
It’s not as scary as it sounds! The underwriting process just means verifying your information and the loan you’re applying for fit all the guidelines. (Each loan has their own set of guidelines) And because we’ve done the prep-work ahead of time, we shouldn’t see any surprises pop up.
#7 - Closing
There’s a reason why it’s so exciting to hear “you’re clear to close” - that’s because the light at the end of the tunnel is so close and shining BRIGHT.
At the closing table an attorney finalizes your paperwork and you sign on the dotted line. Keys in hand - CONGRATS, you’re officially a homeowner!
#8 - Happily Ever After
One year later, still basking in that homeowner glow celebrating your accomplishment. We want you to be happy with your home and your mortgage payment for the long haul! If anything ever changes, we’re here to serve and support you however we can!
What can I expect for costs with home buying?
The most obvious cost is the price of the home itself.
There’s also a down payment, as well as closing costs, earnest money, and the home inspection fees.
How much exactly, all depends on your loan type, the cost of the home you’re buying, your specific financial situation, and your personal goals/needs.
In general, we suggest budgeting at least $1,500, though saving more will give you added flexibility. And we always recommend you connect with your lender for a customized look and answer for your situation.
[Contact us today]
What about second opinions?
As a prospective home buyer, you have the freedom to look at all the options. Your mortgage isn’t official until you sign the final paperwork at the closing table. This means you have the freedom to get second opinions and choose the option that works best for you.
How do I know if I’m ready to be a homeowner?
This is a GREAT question, especially because homeownership isn’t for everyone.
You might be ready to buy a home if:
You’re ready to stay in one area for at least 2 years
You have some job stability
Your credit score is above 550
You want the stability of a fixed payment (versus rising rent costs)
You have some savings to put towards closing costs
You want the freedom and flexibility to make a home yours with paint, projects, etc.
You're ready to build equity
Why do lenders need so many personal details?
You’re right - we ask prospective homebuyers a LOT of questions during the mortgage process.
It’s good to remember that with a mortgage loan, you’re asking to borrow a lot of money. Money that lenders want to make sure you’ll be able to repay over the life of the loan.
In order to cross all the t's and dot all the i's, there’s a level of due diligence that takes place. So yes, we’ll ask for your full financial picture and the documents to verify what you’re sharing.
It’s good for you, too! This helps ensure you’ll be financially confident with a mortgage payment you can afford.
Is buying a home cheaper than renting?
There are costs associated with both buying a home or renting a home.
Oftentimes a mortgage payment can be cheaper than a rent payment. Mortgage payments are also fixed for the length of the loan (excluding Adjustable Rate Mortgages) whereas rent payments rise frequently.
There can be additional costs that come with being a homeowner that usually aren’t an option as a renter.
It’s all about perspective and how you want to spend your money, and what fits in your budget. With homeownership, the money you spend is largely an investment that you will have the option to see a return on, especially house updates, exterior maintenance, and repairs.
Paying rent is money you won’t see again or get back (unless you have a returnable deposit at the end of your lease). However, you likely won’t have to pay for necessary updates to the home like a new roof, water heater, etc.
I've been denied a mortgage before...
Nobody likes being turned down, but it does happen occasionally. Please know that “no” doesn’t mean “never.”
The best thing to do is to understand why you were denied initially. Your lender should be able to provide an answer for you, and you are fully entitled to that answer. Sometimes it's as simple as a missing document.
Most mortgage applications are denied due to lack of credit, insufficient income, a recent job change, unexplained cash deposits, or because of an issue with the house inspection or appraisal.
Have hope! All of the above are fixable issues. A good lender won’t give up on your homeownership dreams.
We’ll work with you to help you get to a point where your mortgage loan application will be given the stamp of approval!
What should I expect from working with a mortgage lender?
We can’t speak for all mortgage lenders, obviously. However, as experts in our field we do feel like we can set a baseline of expectations that separate great lenders from “meh” lenders.
Open communication
Throughout the whole process, from your initial contact and beyond the closing table, we communicate frequently. You can expect updates on the process, answers to your questions, and timely call/text/email replies.
We are here for you every step of the way, which means we’re always available to chat.
Problem Solving
There’s no such thing as a cookie cutter mortgage because every mortgage is unique. Sometimes we get a little creative with our approach in order to help you meet your goals (ethically and legally, of course!). We aren’t scared by complicated things, we embrace a challenge and love to see you succeed!
Financial background
While a financial background might not be a technical requirement, the reality is that we live, eat, breathe numbers… so it only elevates our expertise by having a financial background. We love numbers, love working with numbers, and understand that your mortgage is one (admittedly large) piece of your financial puzzle. So we take a holistic approach to helping you be financially confident with your mortgage.
Industry Connections
It’s not what you know, it’s who you know. And we know people. We want to be your go-to resource for all things financial. We have vetted referrals from Realtors, home insurance providers, auto loan providers, builders, contractors, really you name it, we can connect you!
Judgement Free Zone
We will never judge you for your financial situation, good or bad. We’re here to meet you where you’re at and help you get where you want to go.
Your wellbeing is the top priority!
Our number one priority is seeing you be financially confident. You deserve a mortgage you understand, are comfortable with, and can afford. We want to ensure your mortgage fits into your overall budget based on your lifestyle goals and it’ll be something that works for you for the long term!
When is the best time to buy a home?
People buy homes every week of the year. The better question is - when is the best time for YOU?
That answer will vary based on your situation and needs. Ultimately, as long as it works within your budget and you want to make the move, do it.
What should I know about those “fast and easy” mortgage options I see ads for all the time?
We call those “click me - buy me” mortgage ads.
They can be the fool's gold of mortgage options because they have a shiny exterior but can be a dull lump of crap underneath the surface. They often come with a “teaser rate” or something to draw you in.
Ever do a quick Google Search only to find that some bank you’ve never heard of is offering a rate that is way better than what everyone else is telling you?
That’s the teaser.
They pull you in, and then after sending in all of your documents (likely multiple times), they give an excuse as to why they can’t offer the rate they teased you with and now they are back in line with all the other lenders. (Remember from above - you're not locked in with that lender until you sign the final paperwork. It might be time for that second opinion here!)
They also typically are not familiar with the local market as they cast a wide net for these offers, and if you’re the fish that bites, they start to reel you in, but aren’t the greatest at pulling you directly in - you may hit a rock or two on your way!
I've got gaps in my employment history…
There is nothing wrong with that!
As long as we can clearly explain and educate the underwriter on why that took place, the chance of approval increases.
It is important to be as detailed as possible and if the gaps are too long for underwriting, we can explore other options that you might have as well, to improve the overall risk of your loan application.
I'm self-employed - how will this work?
Self-employment can certainly be difficult with some lenders, but not us!
We have over 30 years of working with self-employed borrowers to find ways to purchase, refinance, or even build a home.
The key to self-employment is that it’s important to show income when filing your business and personal income taxes. Even though that could result in paying more income taxes for the year.
This is because you have to tell the government (the IRS) that you make money, so you can turn around and get out a mortgage loan, which is ultimately backed by the government.
Why do different lenders say different things?
It’s true - you could have two lenders look at your information and receive varying answers to your questions.
The biggest reason is usually due to timing. The mortgage industry deals with fluid data. Rates are changing every day. Credit scores can fluctuate. Your financial situation is also dynamic. So, if you ask one lender your question in March and another lender the same question in May - different answers are to be expected.
It’s also important to note that not all lenders have access to the same loan types and options. So answers and options might vary based on what is available to them.
You deserve a mortgage you understand, are comfortable with, and can afford. So it’s good for you to ask questions so you can choose the option that works best for you.
LIFT “Like I'm five thanks”... (aka I'm hella overwhelmed. Break it down some more.)
Take a deep breath, friend.
The mortgage process can be overwhelming, whether it's your first time through or you’ve done this before. We do this every single day - so we’re here to guide you through it however you need.
If you need financing to buy a home (anything other than a cash offer), you’ll have to apply for a mortgage.
There are several options available to help more people become homeowners.
You’ll answer a bunch of questions and send in some documents in order to know how much house you’ll be approved for and can afford.
If the whole process is overwhelming, just look at the next thing in front of you.
If you’re not sure where to start - reach out for assistance. You’re not in this alone. Contact us today!
Have another question?
We’d be happy to answer!
Contact Us
2753 99th St, Urbandale, IA 50322
Charles: (515) 229-6564
Kyle: (319) 850-2435
Fax: (866) 424-0683
[email protected]