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So, you’ve decided to buy a home. This can be one of the most exciting times in your life, and can also be one of the most stressful. Having a great mortgage partner and being properly prepared is the key to a smooth and enjoyable experience. There are some key steps that you can take throughout your mortgage loan process to be certain that you are prepared from start to finish.

Let's take a look at the steps that will not only reduce stress, but could also save you time and money.

Check Your Credit Report and Score

As you begin your search for the right mortgage loan, you will first want to check your credit report and score. This is also a great place to start when you are determining what aspects of your credit need to be improved and where your credit history is strong.

Your credit report will allow you to understand what the lenders see when determining your eligibility for a mortgage loan. Are there any outstanding debts that need to be paid (such as missed medical bills) or any mistakes that need to be corrected (a bill you paid but the company left on your report)?

Your credit score will affect what interest rates and loan types you qualify for. The lower your score is, the higher your interest rate will be, equaling a higher monthly payment. Credit scores of 750 and above are considered to be excellent, while typically you must have a minimum score of 580 for FHA loans and 620 for Conventional loans.

Gather Your Documentation

Regardless of which lender you select for your mortgage needs, there are certain documents required for the application process. Create a file in which to keep copies of the requested documentation, and if provided by your lender, a checklist of each requirement.

Below are some of the most common requirements and are a great place to start if you have not yet met with your mortgage lender. Keep in mind that each loan applicant (for example, a husband and wife) must provide copies of all documents.

  • Copy of government issued photo ID (usually a U.S. Driver's License or Passport, state ID or resident alien card)
  • Copy of social security card
  • Proof of current income (most recent pay stubs for at least the prior two months)
  • Last 2 years of W-2 Forms
  • Last 2 years of personal income tax returns (1040 Forms)
  • If self-employed, all supporting schedules from tax filings
  • Last 2 months bank statements, showing all transactions for all accounts
  • Last 2 months brokerage or investment statements, showing all transactions
  • Last 2 months retirement account statements, showing all transactions
  • Signed purchase contract for the new property, along with building plans if applicable

These are just general examples of what could be required, and there may be additional documents requested throughout the process as well.

Build a Relationship with Your Lending Bank

One way to increase your chances for approval with your lender is to have a pre-existing banking relationship with them. If you currently have an account with a bank that offers mortgage lending, you are both familiar with each other already.

If you do not have an existing banking relationship or you are looking to change your current banking relationship, consider opening an account at Inter National Bank (INB). INB is a full service, mid-size bank in McAllen, TX that specializes in the overall financial success of our customers. Moreover, our mortgage specialists work hand in hand with you to ensure your home loan process is smooth and timely.

Reduce Your Debt

It is helpful to pay down as much of your debt as possible before submitting any applications for your home mortgage. This will have multiple effects on your mortgage process.  

First, it will help increase your credit score, which is used to determine your interest rate. Secondly, it will improve your debt to asset ratio.

If you have some accounts with only a small balance, you should pay them off but make sure to keep the accounts open. Existing open lines of credit with low or no balances show lenders that you are responsible in how you use your credit.

Another good tip is to pay down balances that have the highest interest rates first. This can save you money in the long run and helps you reach a zero balance faster.

Save Time and Get Ahead

While planning to purchase a home can be a stressful time, following these simple tips can help make the process run smoothly. Pay down your small debts and have the most commonly requested documents ready before you contact your lender to get into your new home fast and easy.

Our mortgage loan professionals can help get you pre-approved and calculate how much mortgage you can afford. Contact our mortgage lending team today.