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The process of purchasing a home is often a lengthy one, filled with countless appointments, inspections, appraisals, and so much paperwork that it can leave you reeling. The most important aspect of purchasing a home is obtaining the funds that you need to purchase the home of your dreams. Mr. Cooper, a leading mortgage servicer and lender, doesn’t believe that you should go into the mortgage application process uninformed. When you know what to expect from the mortgage process, you can make sure that you have everything in order which can help you get through the process as quickly as possible. If you’re getting ready to start the mortgage application process, use this guide to help you work your way through it.

The Credit Score Dilemma 

While your mortgage officer will take a look at several factors before deciding how much money you can borrow, he or she will be keenly aware of your credit score. That’s why it’s such a good idea for you to check your credit score before you begin the application process. According to a study published by CNBC, Consumer Reports says that approximately 34% of people found at least one mistake on their credit report. 

While you’re certainly allowed to work with a credit repair specialist to contest these errors on your credit report, you don’t have to. Finding errors and taking the steps to get them removed from your credit report can help ensure that your mortgage lender has the most accurate information possible when issuing you a mortgage. Getting mistakes removed from your credit report can often be the difference between being able to afford the home of your dreams and having to settle for something less. To do so, you will need to dispute these errors with the three major credit bureaus (Equifax, Experian, and TransUnion), which involves sending letters to the credit bureau that generated the inaccurate report to explain the source of the error, and why it is an error. 

If your credit score is low and there aren’t any mistakes, you may find it difficult to get approved for a conventional mortgage. Fortunately, there are plenty of mortgage options out there, so your lender may be able to help you obtain the funds you need to purchase a home. Even if your credit score is too low to get a mortgage right now, your lender may be able to point out steps that you can take to boost it.

Gathering the Necessary Documents

One of the most important aspects of applying for a mortgage is providing your mortgage officer with the documentation that he or she will need to process your application. There is some paperwork that you’ll need to fill out under the direction of your loan officer, but there are several documents that he or she will request. Having those with you when you begin the mortgage application process can help expedite things, getting you into the home of your dreams sooner.

Tax Returns

Your mortgage lender will need to get as much information about your financial status as possible. Since everyone is required to fill out federal income tax returns every year, and lying on these forms is a federal offense, loan officers know that they can receive an accurate look at an applicant’s annual earnings. This will have a direct impact on how much money you’re approved to borrow.

Proof of Income

In addition to your federal income tax returns, your mortgage official will need to see proof of your income. This can include pay stubs, W2s, and other documents, so be sure to find out exactly what type of documentation your lender needs beforehand. Being able to show how you earn the money that you’ll be using to repay your mortgage is crucial.

Bank Statements

It’s also important to gather any information about how much money you already have on hand. Gathering bank statements and information about other assets that you own will help the lender gather a more accurate idea of your financial status. Be sure to include information about investments, life insurance policies, and anything else that could potentially be liquidated in the event of an emergency. Loan officers like to see that you have several months of mortgage payments on standby should you need them.

Gift Letters

It’s not uncommon for friends and family members to give financial gifts to help someone purchase a home, especially their first one. However, if you have a sudden influx of cash hitting your bank account, your loan officer may ask for proof of how it got there. Obviously, these funds don’t come with a paper trail, so it’s often harder for loan officers to take them into consideration. Having the person who gave you these financial gifts write a letter declaring how much they gifted you and their name will usually be required.

Renting History

If you’re purchasing your first home but have been living on your own for a while, your loan officer will probably require some evidence that you’re financially responsible. If you’ve been renting a home or apartment up until the time where you’re starting the mortgage process, be sure to gather the proof that indicates that you’ve paid your rent on time each month. This lets the loan officer know that you’re responsible enough to pay for your home.

Expect Things to Take Some Time

Finally, you should probably expect the mortgage process to take a little bit of time. Even if you work with a dedicated mortgage officer who puts your needs first, it is important to note that the mortgage process is just that: a process. While there’s nothing wrong with staying informed about where your application is at in that process, you shouldn’t expect to apply for a mortgage and receive the funds that you need the next day. Let your mortgage official give you a better idea of how long the process may take.

Mr. Cooper has a team of lending professionals who can help you get through the mortgage application process as quickly as possible. However, providing their team with the necessary information upfront can help expedite things significantly. Contact Mr. Cooper today to find out more about how they can serve you.

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