5 Essential Things to Know When Getting a Mortgage

I am thrilled to be sharing this Q&A with you on the mortgage process featuring the highly-successful and respected Bridget K. Thomsen, Senior Loan Officer for Mortgage Master, who works throughout Massachusetts and the New England Area to meet the diverse needs of current and future homeowners.  With almost a decade of experience in the financing industry, Bridget has been recognized in Mortgage Originator Magazine’s prestigious Top 200 Originators List for the past 9 years, and she has established herself as a specialist in creating beneficial borrower alternatives through diversified product offerings.  In my opinion, Bridget has been able to set herself apart from the rest through her dedication to spending more of her time focusing on the needs of her clients, her commitment to offer that extra “personal touch” and her philosophy that she treat each and every customer as she would want to be treated herself, recognizing she is only as successful as her last transaction….

If you are in the midst of searching for a home to buy – or just about to start the journey – I am confident that Bridget’s insightful and knowledgeable answers to the questions below will help you as you navigate this purchasing process.

1. Pre-Approval Letter – What is a pre-approval letter, and what does a buyer need to provide in order to get one?

A pre-approval letter is best described as a preliminary “screening” for a candidate looking to purchase a home. It is not a loan commitment. You need a full home appraisal before a commitment can be issued along with verification of income/assets/taxes/insurance, etc. The pre-approval process is simple, and you need to provide the following information to obtain one:

  • The authorization to pull credit form must be signed and emailed or faxed back to me (see my contact information below)
  • Applicants full name(s)
  • Contact #s and email address
  • SSN(s)
  • DOB(s)
  • Current address (do you currently rent or own?)
  • Income (gross)?
  • Assets (liquid and non-liquid)?
  • Any other real estate owned?
  • If you currently own, do you intend to sell prior to or simultaneous to a purchase?  If not, we need tax and insurance information on all real estate owned.
  • Estimated purchase price of new home (condo or single family? What state?)
  • Amount of cash you plan to put down (indicate where funds are coming from i.e. savings, gift, proceeds from sale of current home)
  • Estimated taxes and insurance costs on the new purchase property

Once this information has been collected, a pre-approval letter can be generated and issued, and it is good for 90 days from the date of issuance.

2. Mortgage Commitment Process – Can you explain the process of getting a mortgage commitment? What goes into the process, and how long does it usually take?

A mortgage commitment is a formal loan approval and a guarantee that Mortgage Master will make your loan. The process begins by completing a Uniform Residential Loan Application (this can be done over the phone in 15-20 minutes). Once the application is complete and credit has been checked, the loan is processed, and you will receive a secure doclink via email, including the mortgage application and disclosures for you to sign and return along with the following documents:

  • Legible photo copies of your driver’s licenses
  • 2009 and 2010 tax returns (all schedules and attachments) along with accompanying W-2s and K-1s if applicable
  • Two (2) consecutive pay-stubs covering a 30-day period and showing year-to-date earnings
  • 30 days of bank statements. Please be sure to include all pages for each statement. Also, make sure that any pdf or e-statements clearly show your name and account number.  (A web screen shot with no name on it isn’t acceptable, and please note that any large deposits greater than $500 must be sourced – no exceptions.)
  • Copy of current mortgage statement and a copy of a recent tax bill on your home (if you are not selling prior to or at the time of closing)
  • Name and contact of someone at your employer who can verify your employment
  • Name and Phone #s of buyer’s and seller’s real estate agents and attorneys
  • Copy of fully-executed purchase and sales (P&S) agreement along with a copy of any and all deposit checks written in connection with the new purchase property

Here are the basic steps we go through to complete the mortgage commitment process:

  • STEP 1: Compile a complete and accurate loan application and pull credit
  • STEP 2: Lock in mortgage rate and order an appraisal ($500 deposit required at this stage – fully refunded at closing and retained if applicant w/d prior to closing)
  • STEP 3: Disclose mortgage application and rate/term of the mortgage (via state and federal disclosures) – send checklist of items needed for approval
  • STEP 4: Collect all income/asset/liability documentation along with all the signed disclosures and mortgage application
  • STEP 5: Verify income/assets/liabilities – matching income/asset and liability documents to make sure they match the mortgage application
  • STEP 6: Review appraisal for value and accuracy
  • STEP 7: Submit the loan to underwriter for approval
  • STEP 8: Follow up and provide any missing conditions as requested by underwriter
  • STEP 9: Issue mortgage commitment
  • STEP 10: Schedule and go to closing

In terms of the time it takes to get a mortgage commitment, this is dependent on how fast the applicant can get the documentation in and how long the appraiser takes to complete the report. Once we have a complete file, it typically takes 2-4 weeks to close the loan. We are closing purchase loans in 30 days from the time of application.

3. Home Appraisals – Can you explain the home appraisal process, and how long are they considered “good” or relevant?  And are lenders now requiring two appraisals?
An appraisal is ordered on day 1 – as soon as the application is complete and unless otherwise instructed by the applicant or by the realtor. It typically takes a week to 10 days before we receive a complete report.  The appraisal is considered relevant for 90 days.

Two appraisals are required on all jumbo loans (greater than $625,000), and often times due to the market decline, an underwriter will request either a field review of the first appraisal or a second appraisal if they are not comfortable or confident in the data used in the first report.

4. Credit Score – What sorts of things influence your credit score?

Timely mortgage payments constitute the #1 influence on your credit rating. You miss one and your score will suffer; you make them consistently on time and your credit score will soar. Any late payments will negatively impact your loan and will stay on your credit for 7 years….

5. Closing Costs – What can a buyer expect in terms of closing costs?

Depending on points or rate options … I always say the more you pay, the lower the rate. We do offer ‘no closing cost’ options (in exchange for .125% higher rate). The closing costs are based on the loan amount for which you apply – approximately ½ – 1% of the loan amount, e.g. $300,000 loan amount = approximately $3,000 in closing costs.

Thank you, Bridget (pictured here), for all of your wise and informative answers to and thoughts on the mortgage process, which I know any home buyer (and probably home sellers too for that matter) will find valuable.  If you’d like more information on financing matters or have specific questions, Bridget can be reached at (508) 850-4273 (office), 617-966-6633 (cell), (508) 355-2570 (fax) or bthomsen@mortgagemasterinc.com.

For more information on this or about the real estate market in WestonWellesleyWayland and the surrounding towns, please contact me, Lisa Curlett (781-267-2844 or www.homesalesbylisa.com), to answer any questions or for a complimentary home appraisal.