Humans are interesting and complex. At times people can seem very unpredictable yet we are all motivated by human nature. And human nature is predictable – motivated primarily by pain and pleasure.
How is this relevant to a mortgage? Well, making a home purchase or obtaining a mortgage is a very emotional decision. Refinancing may seem like more of a logic decision but I assure you that emotions will still play a very big part of the ultimate decision when considering a refinance. Understanding how emotions will impact you and when they are impacting you will allow you to make better decisions in the mortgage financing process.
Pain & Pleasure
The two main factors that impact human decision making are pain and pleasure. We are either working to avoid pain or seek out pleasure. Consider anything you do. You are doing it for one of these two reasons.
Why workout? In this case it is not to avoid pain, right? You are doing it to look better, feel better, or avoid worse pain in the future.
Why buy a home? You want to enjoy the space you live more than your current space. Or to get away from someone causing you pain (kids moving out of the home or a divorce situation).
Everything worth doing is due to either pain or pleasure.
When it comes time to buy a home and obtain a mortgage to finance that home how are you avoiding pain?
Getting a mortgage is not enjoyable, I realize that.
First, there is the fact that someone is going to be seeing every aspect of your financial life. They will see your credit report with all of your payment history, open accounts, balances, etc.
Second, they will be reviewing your income. Income, to many people, is very personal. In some cases even their spouses, parents, kids, etc. may not know home much income they earn and now a stranger is going to know.
Then there are the bank statements. The bank statements show everything. It is a glimpse into your life. Where you spend your time and your money. How often you go to Starbucks, the movie theater or the liquor store.
Painful, right? But we aren’t done yet. There is also pain in gathering all of the stuff requested of you. The tax returns, the W2s, the pay check stubs, bank statements, and maybe even more.
So how do people avoid this pain? They delay the mortgage process as much as possible. They delay getting in contact with the person that is going to see all of your private financial details. They drag their feet on providing the documentation. Sometimes it as simple as just not returning a phone call when the lender calls to discuss how your application looks.
You tell me, would you rather apply for a mortgage or look at homes? Yeah, me too! I would much rather go look at potential homes to buy than sit down, complete a loan application or gather all of my financial paperwork together. Looking at homes is fun. It gets your imagination going.
As you walk through different homes you start to imagine your life in these homes. How would you arrange your furniture? Wow, look at all those cabinets to better organize your kitchen. That extra bedroom will be so nice when the in-laws come to visit. Am I right?
Change, although it creates stress, is also exciting. There is opportunity in change. What could be better? How can you use one change, like a home purchase, to make other changes such as new furniture or even a job change.
With the idea of making a home purchase in mind, your imagination wanders and the excitement builds. This could be better. We could do that. What if we did this? The pleasure buttons are getting pressed all over the place.
Keeping Emotions in Check
Our imaginations get the best of us. Neither the pain of getting a mortgage or the pleasure of buying a home is really as bad or as good as it seems.
I have been doing mortgages for 14 years now. I have looked at literally thousands of credit reports, pay stubs and bank account statements. I am not looking at YOU. I am looking at the documents for the purpose of qualifying. It is a puzzle. How do I take your information and find the best possible solution based on the information (income, bank statements, credit score, etc.) available?
It may feel at times as though the lender is judging you. I assure you that most lenders are not. They may be assessing your qualifications to identify the best or available loan options but it is not a personal judgment. Let go of any fear associated with someone reviewing your financing information. They probably don’t care nearly as much as you do. It is like me and spiders. I am sure the spider is much more scared of me than I am of it, but I still don’t like spiders!
On the other hand we have the pleasure we are seeking out. Buying a home is exciting for sure. It is fun to look at the future possibilities based on the move you are making. But, the last thing you want to do is find the home that fits every checkbox on your list just to find out you can’t buy it. Why? Because you don’t qualify for that priced home or you haven’t obtained a pre-approval in order to submit an offer.
Set Your Self Up for Success
The best way to avoid as much pain as possible while receiving as much pleasure as possible is to follow a proven path. Here is the path to success:
- Contact your a qualified and licensed mortgage professional as early in the process as possible
- Apply for the mortgage and have a credit report run
- Complete the pre-approval process, including providing all required documentation
- Identify a real estate agent to help you find a home
- Secure a contract on a home within your pre-approval criteria
- Follow your mortgage professionals Do’s and Don’t’s
- Provide all requested documents within one business day
- Follow through on any actions your real estate agent or mortgage professional instruct you to do as quickly as you can do it
Following those steps will alleviate as much pain in the process that can be avoided while providing you with the most enjoyable and pleasurable experience possible.