Article
Important Read: Here’s How My Clients Beat the Clock By Preparing Ahead
Do you remember the story: The Little Boy Who Cried Wolf?
I have to admit – sometimes I feel as if some of my clients view me as the little boy from the story when I’m repeatedly and passionately asking them to prepare early for the mortgage process ahead.
I’m sending this email to explain how this preparation can make a tremendous difference. Please read on.
If you haven’t done so already – please begin compiling documentation we’re going to need once you’ve found your dream home. For a specific list of what I’ll need, please contact us. Thank you!
Partial List of Starter Documents:
Copies of last two years tax returns
Copies of two most recent paycheck stubs (or easy, quick access to future pay stubs)
Copies of bank and brokerage statements for the last two months
Why Bother Digging Up Documents Now – I Haven’t Even Found My Home Yet?
Because, in the mortgage business Time Equals Money. I’ll explain what I mean below.
What Does It Mean To “Lock” Your Loan?
When it’s officially “go time”, you and I are going to “lock” your loan program with the lender. In turn, the lender is setting aside the funds allocated to your home mortgage. Lenders take these “loan locks” very seriously – as it helps them manage supply and demand.
Generally speaking – the shorter a time period you lock up a lender’s funds, the more preferential the pricing that lender will offer in return. This is huge.
What Do I Mean By the Statement Above?
Typically lenders offer “lock periods” of 30, 60 or sometimes even 90 days. By locking your loan, you benefit from knowing that if mortgage rates rise in the future, your terms will remain unchanged by the lender. As a result of this commitment the lender makes to you, they provide financial incentive for you to choose a shorter lock period than a long lock period. Does this make sense so far? If you are interested in learning more about how Time Equals Money in the mortgage business, I’m happy to educate you – just give me a call!
So, What Is My Ultimate Point In All This?
Today, you and I are not sure if it is going to be prudent to choose a short, medium or long “lock period”. However, if we ultimately determine that a short lock period is best for your situation – it will be critical that we don’t lose even a single day while the clock is running.
Do not make the same mistake so many home buyers have made in the past. When and if I ever tell you that a wolf is coming – I really mean it! By getting your mortgage ducks in a row now, we’ll be in optimal shape for a smooth and cost-saving mortgage process later.
Thanks for reading this! And for allowing me to be of service.
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What is the first step in getting a mortgage?
The first step is getting pre-approved. At Smart Home Lending, pre-approval takes as little as 24 hours and gives you a clear picture of your budget, loan options, and buying power before you start shopping. Pre-approval is free, requires no commitment, and shows sellers you are a serious buyer.
How much do I need for a down payment?
Down payment requirements vary by loan type. Conventional loans start as low as 3% down, FHA loans require 3.5% down for borrowers with a 580 or higher credit score, and VA and USDA loans offer 0% down for eligible borrowers. A larger down payment typically reduces your monthly payment and may eliminate private mortgage insurance (PMI). Your loan officer can help identify the program that fits your goals.
How long does the mortgage approval process take?
Pre-approval at Smart Home Lending typically takes 24 to 48 hours. Full loan approval, from application to clear to close, generally takes 21 to 30 days depending on the loan type, appraisal timeline, and how quickly you submit documents. Staying responsive during underwriting is the best way to keep the process on track.
Do I need perfect credit to qualify for a home loan?
No, perfect credit is not required. FHA loans are available to borrowers with credit scores as low as 580. Conventional loans typically require a minimum score of 620. VA loans have flexible credit guidelines with no set minimum from the VA itself. Higher credit scores generally qualify for lower interest rates, so it is worth asking your loan officer whether improving your score before applying makes sense for your timeline.
How are mortgage rates determined?
Mortgage rates are shaped by a combination of market conditions and your personal financial profile. Key factors include your credit score, loan-to-value ratio, loan type (conventional, FHA, VA, or USDA), loan term, and debt-to-income ratio. Lenders also watch broader economic indicators like the 10-year Treasury yield. Rates change daily, so a Smart Home Lending loan officer can give you a real-time quote based on your specific situation.
Are there any hidden fees in the mortgage process?
All mortgage costs are required by federal law to be disclosed in writing on a Loan Estimate, provided within three business days of your application. This document itemizes your interest rate, monthly payment, closing costs, and any lender fees. Smart Home Lending walks you through every line before you move forward, so you know exactly what to expect at closing.
Can I lower my mortgage interest rate later by refinancing?
Yes. Refinancing replaces your current mortgage with a new loan, often at a lower rate, which can reduce your monthly payment or total interest paid over the life of the loan. Refinancing typically makes financial sense when market rates drop at least 0.5% to 1% below your current rate. Your break-even point, meaning the time it takes for monthly savings to cover closing costs, matters too. Smart Home Lending can run a cost-benefit analysis to help you decide if and when refinancing is worth it.
What documents do I need to apply for a mortgage?
Most mortgage applications require a government-issued photo ID, federal tax returns from the past two years, recent pay stubs (last 30 days), two to three months of bank statements, and documentation of any additional income. Self-employed borrowers typically provide two years of business tax returns and a current profit and loss statement. Your loan officer will give you a personalized document checklist based on your loan type and financial profile.
Will I have a dedicated loan officer to guide me through the process?
Yes. Every Smart Home Lending client works with a dedicated loan officer from application through closing. Your loan officer coordinates with the title company and real estate agent, answers your questions, and keeps you updated at every stage. You will always know who to contact and where your loan stands.
What happens after I get pre-approved for a mortgage?
Once pre-approved, you receive a pre-approval letter stating your loan amount and estimated terms, which you can present with offers to show sellers you are a qualified buyer. When your offer is accepted, your loan officer opens the full loan file, orders the appraisal, and moves into underwriting. From accepted offer to closing, the full process typically takes three to four weeks at Smart Home Lending.
What is a DSCR loan and who qualifies?
DSCR stands for Debt Service Coverage Ratio. It is a loan program designed for real estate investors that qualifies borrowers based on the rental income of the property rather than personal income or employment history. A DSCR of 1.0 means the property's rental income covers the mortgage payment exactly. Most lenders look for a DSCR of 1.0 or higher. These loans are ideal for investors building a rental portfolio who want to keep their personal finances separate from their investment activity. Smart Home Lending offers DSCR loans across its licensed states.
Can I get a mortgage if I am self-employed?
Yes. Self-employed borrowers can qualify for the same loan programs as W-2 employees, including conventional, FHA, VA, and USDA loans. Lenders typically use two years of personal and business tax returns to calculate qualifying income, averaging net income over that period. Smart Home Lending works with self-employed borrowers regularly and can help you identify which documentation approach produces the strongest application.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate of what you might be able to borrow based on self-reported income and assets. Pre-approval is a verified review of your credit, income, and financial documents, and carries significantly more weight with sellers and real estate agents. At Smart Home Lending, we recommend getting pre-approved before you start shopping so your offer is backed by a real lender review, not just an estimate.
What states does Smart Home Lending serve?
Smart Home Lending is licensed to broker residential mortgage loans in Arkansas, Colorado, Florida, Illinois, Iowa, Kansas, Minnesota, Missouri, Oklahoma, and Texas (NMLS #2140357). If you are located in one of these states and are ready to buy, refinance, or explore your loan options, a Smart Home Lending loan officer is available to help.
Can I buy a home with no money down?
Yes, in certain cases. VA loans offer 100% financing with no down payment for eligible active-duty service members, veterans, and surviving spouses. USDA loans also offer zero down payment for eligible borrowers purchasing in qualifying rural and suburban areas. Both programs require meeting specific eligibility criteria. Smart Home Lending can help you determine whether you qualify and walk you through the application.