you know what has amazed me the MOST about this process? not how much money i’m forking over. not that i’m signing my name on 9 million pieces of paper.
that this process is so. effing. complicated. no one really reads this blog right now except a few of my (very dedicated) friends (hi guys! you’re the best), but maybe someday, someone will stumble upon this post, knee deep in the mortgage application process, and think, OMIGOD, I’M NOT ALONE.
so, without further adieu, here are 5 things no one tells you about the mortgage process.
- not all banks are created equal. this sounds like a “no duh” situation, so let me elaborate. when you initially set out on your mortgage journey, you’re likely working with a) a bank recommended to you by your broker (my situation) or b) a bank recommended to you by a friend who has been through this process before. here’s the thing, though. those two options are all well and good, but they’re not necessarily the options that will get you the very best rate. see, all banks set their own rates. and those rates change not just daily, but sometimes hourly. so at any given time, you may find yourself asking: am i going with the right bank? could i find a better deal somewhere else? banks are businesses, and just like any other business, they need to make money. so they want you to sign with them, because it means you’ll be paying them your quoted mortgage amount (principal) and THEN all the interest on top of it, over the next 30-odd years. in short: they can make some serious money off of you, so they’re going to talk up their services, and their rates, as much as they possibly can. that’s not to say they don’t have your best interests at heart – sometimes, they do – but for the most part, you need to do what you’d do in any other important situation: do your research, and trust your gut. and then ask a shit ton of questions.
- not all paperwork applies to you. as soon as you officially start the loan application process, banks are required by law to send a TON of forms your way. these are called “mortgage disclosures” and almost all of them are legal documents filled with completely confusing legal jargon. reading them, and trying to decipher their meaning, is like attempting to read a book in another language, and then being asked to write a book report on it. and here’s the kicker: though the government requires that the banks send you all this info, not all of it applies to you. as in, your set of loan disclosures might include 30 forms that say “sign and date and send back ASAP” – and yet, you may only ACTUALLY need to sign and date 4 of those 30. nowhere will it say this, you won’t know until you ask. my advice? as soon as you receive your loan disclosure forms, ask your mortgage broker for a list of which documents you MUST review, which ones you MUST sign, date and return, and which ones are purely for, you know, “pleasure” (because who doesn’t like to read legal documents in their space time?).
- your pre-approval is not a guarantee. your pre-approval letter, which you’ll need to submit an offer on a home, is based on a few things, but mostly, the income you tell the bank you have, your monthly expenses, and your credit score. what no one tells you is that your pre-approval is just that: a PRE-approval. meaning, it does not dictate that you’ll ACTUALLY be approved. that will come later, once you’re bared your financial soul, had to account for every single late payment you’ve ever made, and basically promised the bank your first born child. it’s some epically biblical shit, you guys. i swear, i have never felt so self-conscious in my life. i feel like a fraud, like any minute now, someone’s going to tug the rug out from under me, i’m going to go flying, banana peel style, onto my butt, and they’re going to yell, “PSYCHE! YOU’RE NOT CUT OUT FOR THIS! YOU LOSE! NA NA NA POO POO!” your best path forward? to make sure you have all your ducks in a row, financially, before you apply. that means checking your retirement accounts, checking and savings accounts, paying off any remaining student loan debt and credit card debt (within reason, if possible), and basically, making sure you’re as financially sexy as possible so that the bank is all, WE WANT HER!
- you’re going to be terrified. this is sort of a continuation of the above, and also, sort of goes without saying, but all anyone has asked me since they heard the news has been, “are you SO EXCITED?!” and yes, i am SO EXCITED. i am also SO FUCKING TERRIFIED. maybe it’s buying in new york, maybe it’s buying a co-op, but there are still so many stages of this process that need to happen before i can even BEGIN to truly feel the excitement and the gravitas of what i’m doing. that’s not to say i’m not happy, but just that i feel, in equal measure, totally terrified. i’m scared what it could fall through. i’m scared of being rejected. i’m scared that it’ll be more money than i anticipate, and that i won’t be accurately prepared. i’m scared that i’ll do something wrong, or misunderstand a piece of paperwork (or, even worse, not understand it at ALL). while my parents (and in particular, my uncle, who is a business whiz) have been completely supportive and insanely helpful, they’re not here, sitting by my side, as i sift through all this paperwork and make big decisions that directly impact my future (and the future of my potential offspring, if i have them). i’m doing this, little old me, all on my own. and that is some scary shit.
- you’re not alone – and yet, you are. when i first started this process, i didn’t really realize just how many people i’d have on my team. there’s my real estate broker, eric, who went with me to open houses, sent me listings, helped me submit my offer and then a counter offer, is helping me put together my board package, and has generally been available to answer questions. then there’s andy, my lawyer, who worked with the seller’s attorney to review the draft contract, make revisions in my favor, and then walk me through the final version (which i signed to put the place in contract). then there’s doug, my mortgage broker (not to be confused with my real estate broker) at wells fargo, who has walked me through every single step of the loan application process, churned out dozens of pre-approval letters for me in record time, and has also been around to answer the 9 million seemingly innocuous questions that have been keeping me up at night. and that’s not all. there’s also doug’s assistant, amy, who, well, i’m not sure what she does. then there’s teresa, also at wells fargo, who works as a liaison between doug, who “sold” me the mortgage, and the unnamed underwriter, who is reviewing my application and will ultimately decide my destiny. and that’s just BUYING the place. there’s a whole other set of people assisting with the renovation. and yet, despite having all these people to talk to, and all these people to listen to, at the end of the day, it’s my decision. it’s my decision what type of loan i apply for. my decision that kind of tile i put in the bathroom. it’s my decision whether i pay to bust down a wall and open the place up, or save money and keep it as is. and that’s, you know, kind of a BFG (big fucking deal, for those not familiar). i wish someone had told me this: that despite all the help you’ll have, you’ll still be alone, at the end of the day, in your own head, just like you always are, trying to decide what’s right. since no one told me, i’m telling you. LEARN FROM ME, FRIENDS. SAVE YOURSELF.
and there you have it: a long, rambling account of all the things i wish i’d known before i started this process.
the funny thing? despite how complicated this is, despite how stressed it has made me, despite how worried i am that something will fall through, i feel this underlying current of peace. this underlying sense that i can do this, no matter how hard it is. this underlying sense that at the end of the day, it’ll all be worth it. and that’s all anyone really needs, right? an underlying sense of peace?
now, if only i could apply that peace to, you know, the rest of my life.