7 Tips to Streamline Your Home Loan Process

When it comes to buying a home, things can get confusing—whether you are a seasoned home owner or a first-time homebuyer. Plus, buying a home in a post-pandemic environment has been difficult for buyers due to low inventory, high demand and increased prices. According to the National Association of Realtors, median home prices increased 23% in 2021 compared to 2020—and this trend is expected to continue.

To make the homebuying process easier despite these challenging conditions, we’ve put together a few tips to help you each step of the way.

1. Figure out a realistic budget

Before you start looking at homes or going to open houses, your best bet is to start talking with a local lender to get a realistic sense of your budget.

“When people are looking for homes, sometimes they just look for the maximum that they can afford based on what they believe to be qualifying income,” says Christine Blackwood, Senior Residential Loan Officer at Associated Bank. “But when we talk to potential buyers early in the homebuying process, we can determine exactly what their qualifying income is and together, we can decide if that maximum purchase price and payments are within their comfort zone for long-term living.”

If you are in the very early stages of home shopping and don’t feel ready to speak with a loan officer yet, use a mortgage calculator to help you determine the maximum home price and mortgage loan you may be able to afford. Our other home loan calculators can you help determine how much your mortgage payments will be, how much you need for a down payment and much more.

2. Partner with a lender

Connecting with lender will help you to identify your overall strengths and weaknesses in the market and, ultimately, improve your chances of submitting a winning bid.

“It’s always best to start the conversation early so we can determine your eligible income, credit and employment history in order to identify any potential underwriting issues ahead of time,” says Blackwood.

She recommends getting the ball rolling with a casual conversation with a trusted lending partner who will take the time to educate you on the various lending programs available.  Once you are comfortable, submitting an application and allowing your lending adviser to complete a credit report analysis and income review will be beneficial.

3. Get pre-approved

In today’s hyper-competitive housing market, getting pre-approved is often necessary.

“From a markets-driven standpoint, we are in a place right now where sellers and real estate agents have more buyers than they have homes to sell,” says Blackwood. “Sellers are going to lean toward potential buyers that are pre-qualified or pre-approved, so they know they’re not wasting their time entertaining offers that will not be financeable.”

A pre-approval letter in hand gives sellers peace of mind that the buyer is serious about the offer and willing to move quickly to ensure a timely closing. 

4. Limit loan applications to protect your credit score

Talking to different lenders about what they have to offer and checking interest rates can be valuable. However, a lot of what goes into making that decision goes beyond interest rates.

“Some of the shopping might be best served by talking to the different lenders, but full application and credit pull should be kept to a minimum once you have a sense of who you feel comfortable moving forward with,” says Blackwood.

She stresses that protecting your credit score should be a priority and that having a report pulled by multiple lenders can have a negative effect on your credit scores.  It is important to keep in mind that the interest rate charged on your mortgage is impacted by your credit score, which can affect your eligibility and over time the overall cost of the home.    

5. Move quickly—but not recklessly

In the post-pandemic housing market, there’s more pressure than ever for buyers to put their best foot forward and move at high speed.

“[During the pandemic], offers were being placed with no inspections and no financing contingencies. That results in a significant risk that the buyer is taking on. Quite frankly, it was a little scary seeing first-time homebuyers put in that position,” Blackwood recounts.

She advises all buyers to view the home in-person and cautions against closing on a property without conducting a professional home inspection and appraisal.

6. Take advantage of virtual services

One positive aspect to come out the pandemic has been the improvement of online services, particularly in real estate. Blackwood says that reliance on online application systems increased dramatically after 2020. In fact, Associated Bank’s online application system was used about 25% of the time before the pandemic. Today, 95% of applications are entered through the online portal.

“We’ve adapted well to serving clients at the highest level in a virtual setting,” says Blackwood.

Although face-to-face financial counseling has decreased in favor of virtual counseling, lending services have remained stable throughout the pandemic. “We have secure systems in place so clients can upload their documents into the loan portal from home,” says Blackwood. “One of the positives that came out of the pandemic was how inventive we became, as our industry adapted to information gathering in a new way.”

7. Build a one-on-one relationship with your loan officer

Although younger generations of homebuyers appreciate being able to research and do preliminary shopping online, Blackwood still finds that building the buyer-lender relationship is the most important aspect of the process.

“I see a lot of [Millennials and Gen Z] who enjoy shopping, screening and doing their investigative work virtually,” she says. “Many, though, want a relationship once they are serious about beginning the loan process. They want the ability to work with and talk to a live person, to know that there’s a local contact.”

Virtual services certainly streamline the home loans process but having a reliable point of contact and feeling protected in the process will lead to a more positive and pleasant experience for all potential buyers.

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