3 Way to Speed up the Mortgage Loan Process

Interest rates are nationally on the rise and 30-year fixed mortgage rates are forecasted to average 5% in 2022 and rise to 5.1% in 2023, according to Freddie Mac. This is a massive increase from the average interest rate of 2.96% in 2021 to help combat inflation but is reported to be the biggest quarterly climb in 28 years. Since many don’t see these interest rates or housing prices lowering significantly any time soon, you’ll want to get into a home ASAP.

The mortgage loan process is confusing, especially for first-time homebuyers who need a bit of extra guidance navigating a seller’s market. Follow these tips to speed up the mortgage loan process and move into the house of your dreams before interest rates climb even higher:

A mortgage pre-approval varies from lender to lender but is necessary to help you understand your purchasing power in the current housing market. If you’re a series home shopper, make sure to report all details as accurately as possible to save time.

Quickly gather documents like your proof of income, proof of employment, information on monthly debt (student loans, auto, personal loans), proof of identity, and proof of assets. Mortgage lenders need to know quite a bit of information about your current situation and it’s normal to feel uncomfortable when asked for this in-depth of documentation. Be sure to work with a lender you trust and organize all files in a safe environment where none of your information is at risk of being stolen.

Your credit history plays a critical role in the home buying process because your credit score determines whether your application is approved and what rates you’ll gain access to. Generally speaking, you’ll want to aim for a credit score that’s 640 or above to qualify for the most appealing rates that fit your plan. If you need time to increase your credit score, focus on paying off past due balances on credit cards, only use credit when necessary, and avoid closing old credit cards.

Additionally, you’ll want to keep an eye out for credit fraud because these mistakes take time to correct. Credit card fraud and identity theft increased by 23% in the COVID-19 pandemic with the increase in online shopping, according to TechRepublic. Try visiting Annual Credit Report.com to pull a free credit report from Experian, TransUnion, and Equifax to ensure there are no surprises and the whole process runs smoothly.

Saving money for a down payment on a home in the current economy is a challenge because 64% of Americans are living paycheck to paycheck, according to U.S. News. Even 48% of those who rake in a salary of $100,000 or more are living paycheck to paycheck.

With an inflation rate of 8.5% in 2022, it takes some extra time and attention to save money but is possible with healthy financial habits. The good news is many first-time homebuyer programs require as little as 5% for a down payment and VA programs don’t require a down payment at all.

You’ll need to take time to strategize if saving up for a down payment of more than 5% is worth it, or if it will cost you more over time because you’re not locking in a lower interest rate. Get in touch with your loan officer for assistance with this calculation and overall guidance on what the best next steps are.

If you’re looking to work with an experienced loan origination team for your next big home purchase, check out the team at 1st Rate Mortgage. We help our clients in Utah, Colorado, California, Idaho, and Wyoming create wealth through home ownership by finding the perfect mortgage option.