It’s a common phenomenon in the mortgage industry – prospective buyers will disappear when asked to complete their application, never to be seen or heard from again. Some people find the mortgage application process overwhelming, stressful, or time consuming. Others don’t understand why it should be necessary.
Let’s demystify it.
What is a mortgage application?
The mortgage application is an in-depth form of your personal and financial information. After the application is completed, your credit history is also provided to the mortgage company.
All the information you provide on your application, along with the documents that you submit, help the lender determine if they can offer you financing for your home purchase.
Why do you have to do it?
You complete a mortgage application to provide the lender with everything they’ll need to determine your eligibility for a home loan. This includes where you are currently employed, as well as your employment history over the past 2 years, how much money you make, what your assets currently look like, whether you receive or pay child support, and more.
Without the loan application, it is impossible to know what your credit looks like, if you are employed and have any employment history, what your current debts are, etc. Without the information provided on the loan application, you could be approved for a loan that you don’t actually qualify for. Additionally, the application is required by law in almost every state in America.
In general, the loan application process is also a great way to develop an idea of your readiness to purchase. For example, if you are unsure what your credit score is, or don’t know how much home you could afford if you bought today, a mortgage application is one of the best ways to get answers. Some mortgage companies (like us) help you get ready to buy a home by putting together a purchase plan with ideas for credit improvement, income, co-signers, and more.
Why some buyers are hesitant
Some borrowers are afraid to complete the application because they are concerned about the inquiry on their credit.
According to FICO, inquiries impact your credit score by just 5 points or less, and the impact is only temporary, generally disappearing after a few months.
If you’re still uncomfortable, talk to your representative about a soft inquiry. This kind of inquiry will not affect your credit score. This kind of inquiry is possible, but generally not recommended as the information it provides to us is limited.
Some buyers find it overwhelming or think it will take too long
The mortgage loan application can seem overwhelming to some, but it really isn’t a large time commitment, and it’s organized by section which is very helpful. For most, the application takes just 15 to 20 minutes. It can generally be completed online in a secure application portal, and once it’s been completed, your loan officer can see it right away.
If you are still feeling overwhelmed, some mortgage companies (like us) have a local office and staff available to assist you with your application via the phone, a zoom call, or in person!
Another tip is to simply take the application one step at a time. The questions aren’t difficult and you will know the answers to most of them off the top of your head.
Some buyers are afraid that completing the application is a commitment to buying a home
Fear not; completing the mortgage application is not a commitment to purchase! Some buyers purchase 6 months after their first application, and some never do because their situation changed.
Completing an application and not proceeding on to a purchase right away does not come with any kind of penalty or consequence – although, of course, our ultimate goal is to help you find a home.
Still feel queasy when you think about the mortgage loan application? Talk to a member of our team!