Whether you chose to get your mortgage from a mortgage broker or via the broker at your bank, this is the first date of a new and exciting relationship in your life. You’re about to become a homeowner!
But first, a quick word on the difference between the two before we continue. Mortgage brokers work with various wholesale mortgage companies and will find you the best fit for your unique needs; maybe you’re self-employed, have less than ideal credit, or you’ve recently moved to a different state. The broker at your bank, however, will specialize in providing you with the services and products from that bank only. If you have good credit and a fairly linear and uncomplicated credit history and only want one lender to help you buy your house, this may be the most straightforward option for you. Regardless of your situation, choose what feels right for you. This is a long term investment with long term consequences – I mean, payment plans.
Whoever your broker is, it’s important to remember that they’re not a gatekeeper. They’re not the bouncer at a club keeping you from owning a home or a troll giving you a riddle to solve before you close on a house. They’re your ally and team member. Your broker is your hired shark who’s made their career on finding the right mortgage options for their clients. You don’t have to do the research and legwork. Your broker’s already come to this meeting prepared with years of experience. So, are you ready for this meeting?
To help you get ready here are a few things you should have prepared going in to your first date with your broker:
Identification – This person doesn’t know you. This is a meeting where they’ll get to know you and if this were a normal first date, having your ID checked would be a red flag. However, because this is real estate, they’re going to need to see a government issued ID from you to verify that you are who you say you are.
Long Term Goals – Think through what you’d like your life to look like in the next 5, 10, 20, 30 years from now. What kind of family do you have or plan on having? Do you anticipate your parents moving in with you when they get older? What kind of space do your pets need? Where do you work? Is this your primary residence or just an investment property and if so, what goals do you have in mind with this investment? Mortgages aren’t all one-size-fits-all. Not everything is a fixed-rate 30 year repayment plan. Getting more specific with your broker will help them not only find the right mortgage for you, but it will also help you get even clearer about what kind of home you want.
Proof of Income – The next few line items will help your broker form a complete picture of your financial history. First up is your money coming in. Your broker will need these documents as your proof of income:
- Tax returns for the past 3 years
- Pay stubs for the past 3 pay periods
- Bank statements for the past 3 months
Debt History – It’s important to be upfront with your debt. Everything is attached to your Social Security Number and nothing you attempt to keep secret will stay a secret for too long. It’s best to be honest with regards to your already present debt so your broker is armed with all the facts. Be ready with these documents for your first meeting:
- Credit card bills for the past few months
- Student loan statements for the past few billing cycles
- If applicable, a form indicating if you’ve declared bankruptcy in the past. Everyone’s circumstances around bankruptcy are different and therefore yield different forms. So, bring whichever one you have for your broker.
Proof of Savings – That down payment has to come from somewhere, right? However, not all savings are the same. Depending on where you’re at with the cash you have available at the ready to contribute towards this purchase, you’ll need to provide proof that this money is real and 100% yours. Such proof includes:
- A personal savings account statement
- Statutory declaration of a gift: if your family is helping you by providing cash funds towards your purchase, for example, a simple dated and signed letter saying that they are giving you a set amount of money that is non repayable and nonrefundable will suffice. A gift is fine in theory, but until it’s in paper, your broker is only working off a promise.
Questions – You’re going to a broker because you, yourself, aren’t a broker. The same way you hire an electrician because you are not, in fact, an electrician, they have knowledge that you don’t. And they get that! There’s no need to over explain why you don’t know what you don’t know, just ask your questions as clearly as possible. Go ahead and ask them what a fixed rate mortgage is as compared to a variable rate mortgage. Dig into what repayment plans look like and questions about what to expect in the long term and in the short term.
Remember to keep an open mind. Even if you’ve already done your research and are coming from an informed place, remember that what your broker answers you with may contradict what you’ve seen on the internet. Trust your broker. This person literally supplies buyers with the right loans and lines of credit for a living. Don’t get mad if you ran the numbers on your own only to see your expectations differ from reality. That happens. It’s why you had this first date to begin with. Just stay open to new information and go from there.