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hey guys welcome back to my youtube welcome back to my instagram today i want to talk about mortgage loans and the entire mortgage process it can be a long process it can be a tough process but it can be an easy one as long as you have the knowledge to get through it before going into it so first things first before you even start looking for your home before you start you know looking at all these houses on zillow and realtor.com you want to know how much house you can actually afford and the only way to do that is to get a pre-approval so once you find your mortgage lender and a good realtor a good realtor will usually have a few preferred lenders that they like to work with lenders that you know that have proven track records to get you to a clear to close so that's the goal here we want to get your loan to a clear to close those are like magic words in the mortgage world in order to get you to a clear to close you first have to get pre-approved then you have to get approved then you can get a clear to close so your realtor will likely have multiple mortgage lenders that they work with depending on what your situation is what type of loan you're getting to recommend you to and you're going to get with that mortgage lender and they're going to go through a few things with you one of those things is they're going to pull your credit that's the first thing that has to happen they have to see where you are what your credit score is what loan can you qualify for are they going to do conventional are they going to do fha all depends of course if you're a veteran you should be getting a veterans loan so make sure if you are a veteran you let your mortgage lender know that in addition to pooling your credit they will be reviewing a little bit of your income documents not all of it they might ask you to send one or two pay stubs and a w-2 but they're not going to ask you for the full full mumbo-jumbo until they're actually getting the loan in process after you've gone under contract for your house they will pull your credit they will look at your pay subs your w-2s to determine your debt to income ratio because the whole goal here is to make sure that you as the borrower have the ability to repay the loan that is what mortgage lenders are looking at when they're qualifying you for a loan so there are certain credit score limits or minimums i should say there are certain credit score minimums there are debt to income ratio limits you can't have a certain amount of debt to income otherwise you will not qualify for your loan fha the max you can have is 56.9 percent and conventional you can go up to 50 depending on what program you're going with so you want to get pre-approved with your lender and at this point you do need to be upfront with your lender about everything don't think that you're hiding something because all it's going to do is come up later in the process so if you do have to pay child support or maybe you're receiving alimony income or maybe you owe back taxes and you have to pay the irs every month because you're on a payment plan these are things you want to let your lender know up front so that they can see the full situation and know exactly how to handle your loan before it gets to the underwriter and i will get into the underwriting process later in this video so just stay tuned so once you have your pre-approval the pre-approval is an actual letter and it tells you how much house you can afford so your maximum mortgage payment that you can afford based on your debt and your income is going to be x amount of dollars each month which translates to about x amount purchase price for a property so the lender will let you know whether you know you can be looking up to three hundred thousand dollars or really you shouldn't go over 250 000 depending on again your income and your credit so that pre-approval letter you take it to your realtor and you say hey i'm ready to shop the realtor is gonna say all right let's go let's go look at houses and hopefully you don't have to look at too many and you you go shopping for your house now here in atlanta it's a seller's market unless you're selling a condo it's a seller's market here so you can expect the home buying process to take longer than it used to take maybe last year and this is because there is just low inventory there are not a lot of houses on the market right now a lot of people are not selling their houses right now so the houses that are being sold they are going for top dollar and most of the time they are going for over asking price so you as the buyer and your realtor should be prepared to put in multiple offers and you will likely have to shop below your price range because you will have to over offer on the property so you want to keep those kind of things in mind and this just goes back to making sure you're working with a good realtor who also understands the mortgage process and can help you get through the loan faster so you're going to take your one two three weeks sometimes it takes one or two months shopping for your property and once you find the property that you like your realtor is going to put in an offer on the property your offer you want it to look gorgeous especially because we are in a seller's market right now so any offer that has extra contingencies or long inspection periods they're not looking appealing to the seller right now because the seller they get to choose right now they get to look at all of these different offers and say no i don't want to do the va loan because you know they have certain appraisal requirements or hmm i don't know about that fha loan because you know what if they end up not qualifying oh but we have this cash buyer right here who's ready to close in seven days and we don't have to worry about them getting a mortgage loan or we even have this conventional loan here they're not they don't have an appraisal contingency in the contract they don't have an inspection period in the contract so whatever happens you know even if it appraises for low this is these are the ones that look better than the contracts that come in with oh well the property has to appraise at the purchase price amount or i need seven days for an inspection period so that i can get a home inspector there to make sure the property is okay and if it's not then i have the right to back out that's what an inspection period is it allows you as the buyer to bring in anybody it can be an inspector it can be um you know a pest examiner to make sure that there are not a lot of pests in the house anything that you need to do to check out the property to make sure that that's the property you want to buy in usual circumstances if it was a buyer's market you know a seven day inspection period is fine usually there's nothing wrong with that i did that when i bought my house however in a seller's market the sellers don't want to see that because they know that you as the buyer have the right to back out of the contract based on anything during that inspection period even if you just wake up one morning and decide i don't want to buy the house you can back out of the offer and get your earnest money deposit back now let me touch on earnest money deposits a deposit is not the same thing as down payment a deposit is funds that you give to an escrow company or title company to be held until you actually close on the property and this is just pretty much so you have skin in the game so the seller knows okay they are serious about buying this house because they are putting down a three thousand dollar deposit and the deposit amount just depends on the purchase price usually a lot of realtors will do one percent but obviously the higher deposit that you put down the more serious you look as a buyer because you have more skin in the game so the seller is not holding deposit funds you are not holding deposit funds the realtors are not holding deposit funds the title company or the escrow company hold to deposit funds until they need to be dispersed if they need to be dispersed otherwise it will just be a credit on your closing statement and that will come out of your closing costs as long as everything is good to go with the property and you move forward and you guys actually close on the property otherwise if you decide as a buyer to back out of the inspection period back out of the i'm sorry contract during the inspection period then you have a right to that three thousand dollar or however much the deposit was you have a right to get that back otherwise if for whatever reason the day before you're supposed to close on the loan the inspection period has since passed and the day before you close me alone you decide oh i don't want to buy the house anymore well the seller gets that deposit because you just wasted their time and they wasted their time having their house off of the market because they thought you were going to buy and you did it so they're going to get compensated for that with that deposit you do want to be cognizant about the inspection period in your contract if you guys will be using one and these are things that you speak with your realtor about so yay you have a seller they accepted your offer you guys are under contract you put in your earnest money deposit or your emd now at this point you need to let your lender you need to let your lender know right away that you are now under contract for a property that way they can actually get your mortgage loan going because they can't really get your mortgage loan going until you are actively under contract for property because they need to tie a property to the mortgage loan so you will send the offer or your realtor will send the offer to your lender the signed offer the purchase agreement and at this point your lender will come back to you and request all of the documents that they foresee that you will need for underwriting these can be bank statements it can be two months bank statements one month bank statements it could be multiple pay stubs two years w-2s explanation for credit inquiries on your credit report things like that they will request these documents from you and then send your loan to the underwriter once the underwriter has your loan they will literally underwrite the loan and it's just a better way of saying that they are looking at all of that documentation in great detail to make sure you as the borrower have the ability to repay the loan and that's the whole thing here about mortgage underwriting mortgage processing mortgage lending we have to make sure that you as the borrower have the ability to repay the loan that you can afford it because if you if it doesn't look like you know if your debt to income ratio is 70 you can't afford this house you can't qualify for this loan you either need to find a cheaper house or you need to pay down some debt so that your monthly debt is not so heavy towards your income so that's the whole goal here they want to make sure that you have the ability to repay the loan and a lot of things come up in underwriting and this is why it's very important to be honest with your mortgage lender at the beginning of the process let me say this again you cannot hide anything you can't it's going to come up they will find out if you own other properties they have to calculate that towards your debt to income ratio they'll find out if you owe child support they'll find out if you owe the irs all of these things will come up in underwriting so you will put yourself in the best situation if you just let your mortgage lender know these things up front that way they can help you get your loan clear to close faster without having multiple hiccups here's the thing guys the mortgage lender is on your side they want the loan to close they want you to get in the house why because they get paid they make money that's how that's how the business works every time you close on a loan they get paid a lot of people get paid the mortgage lender gets paid the title company gets paid the realtors get paid everyone is here working to get paid and the only way they get paid is if you get in the house so it's in everyone's best interest if you are honest with everyone to make sure that you have a smooth and successful processing of your loan application otherwise there's just going to be hiccups and delays people are going to be frustrated and the last thing you want to do is lose out on a property because you were not honest and up front from the beginning about your situation all right now the underwriter they have your application they have all of your documents they are reviewing your loan and like i said this can take anywhere from two days to two weeks to a month underwriting turn times are currently long due to covid so just keep that in mind and be patient with your lender once the underwriter finishes reviewing your loan what they'll do is issue an approval and it will be called an approval with conditions or conditional approval and these conditions on the loan are just things that you and your lender will work to satisfy to get them cleared these conditions can include things like documentation for your earnest money deposit so they'll want to see your bank account that you actually made the deposit funds out of toward to the title company to be held in escrow and a copy of the check or the wire confirmation because they want to make sure that those funds actually came from you and not from someone else like your friend or the realtor on the deal they want to make sure that it's you actually buying the property and not someone else trying to buy the property in your name so that's one of the conditions that can come on your loan you may have to explain credit inquiries you may have to explain any pay increases or decreases or time taken off from work based on a verification of income that the lender will pull especially if you have been working at your job for less than two years your lender will request a verification of employment from your employer that has a breakdown of your pay history for the last two years or the last however long you've been working there and then you will have to have a previous employer on your application to make up that two-year employment history requirement there can be a multitude of other conditions again if you owe taxes to the irs they will want to see the payment plan that you were on to calculate that into your debt to income ratio so it is very very important that you get your lender any documents that they request right away we have some borrowers who take two hours to get us documents and then we have borrowers that take two days or two weeks to get us documents and then they're wondering why it's taking so long or that they have a delay on their closing and you know they haven't really been that responsive so if you want to get to the closing table fast and without an issue just do what your lender is asking you to do send them what they're asking for and send it as soon as you can that way they can get those documents back to the underwriter and they can get those conditions cleared and then your underwriter will issue a clear to close yay you gotta clear the close clear clothes is like mortgage gold that's like magic to our ears in the mortgage industry that's the whole point of the loan so you start from your pre-approval the whole goal is to get you to a clear close that's the underwriter telling you that you are clear to close on your loan on your house you can go to the closing table now it's at this point that your lender you your realtors the seller the title company everyone will come together schedule your closing you guys will go to the closing table and these days and times covet you may have a notary come to your house or you may close in a different location separate from the sellers and that's okay we're just dealing with the times right now but now at this point you can actually close and get those keys so key takeaways make sure you get your pre-approval early get it before you really even ready to start looking for houses to see where you are there could be something on your credit report that you're not even aware of so you want to take care of those things right away get with your realtor they likely have multiple lenders that they can recommend to you that they've worked with before and that have a proven track record anything that your lender is requesting from you get it to them as soon as possible to ease the entire process and be upfront from the beginning you can't hide these things there are multiple websites and checks that lenders and underwriters utilize to see if you the borrower own other properties or you owe other debt or you have liens against you they're going to check for these things so be upfront about it from the beginning and if you ever have a question need any advice or just want to talk reach out to me my number is below my name is brianna jackson and stay tuned for more videos on my page