The process of applying for a mortgage intimidates most people, especially first-time home buyers. Whether you're renting a tiny apartment or a big house, or still living with your parents, people who haven't been through the process have no idea what to expect, which causes fear of the unknown. Oftentimes they assume they won't qualify to a buy a house, so they continue to rent instead of investing in their own future, which is fear of rejection and disappointment. Others have kept such poor records of their finances that the thought of getting organized is just too overwhelming, which leads to more procrastination.
Regardless of the reasons for your anxiety, it may help to know that it's fairly universal. Ask anyone else that's gone through it recently and you'll hear similar stories over and over. The mortgage application process really isn't that scary or even difficult if you know what to expect.
I think the very first step to reducing application anxiety is to find a lender that you like. There is no one-size-fits-all; every buyer has a unique personality, so what matters to you may not matter to someone else. Recommendations from friends and family are great, but just because you trust them doesn't mean their needs are the same as yours. Think about your preferred communication style, for example. Do you want someone that can chit-chat for hours, or do you want to keep the dialogue to necessary information only? Are you someone that feels more comfortable talking about private matters in person, over the phone, or via email? How quickly does this lender typically take to respond to questions? You should pick a lender that will work well with your style and expectations for customer service.
The second step is to gather up the documents that the lender is going to need to process your application. Doing this ahead of time can save on numerous hiccups down the road. However, no matter how much documentation you provide up front, still expect the lender to request more from you once you're under contract to purchase a particular home. To streamline the process as much as possible, though, you should plan on producing the following documents: your driver's license, bank account statements, W-2's and tax returns for the past 2-3 years, and pay stubs for all sources of income (including child support, pension, disability, etc).
The last and most important step is to summon all your courage and just do it. You'll never know whether you qualify if you don't apply.
Buying a home is like a marathon, not a sprint. The process may test your endurance and commitment. Consider asking friends and family to be your cheerleaders and sounding boards, providing support and encouragement along the way. It's a big decision, but remember that you are in charge every step of the way.
Hiring a Buyer's Agent to guide you through the process is a great idea, too. More to come in a future blog about that topic.
