4 Actually Helpful Homebuying Tools in That Government-Issued Mortgage Booklet You Threw Away

published Feb 18, 2021
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Every person who applies for a home loan is sent a copy of a booklet from the U.S. government called “Your Home Loan Toolkit: A Step-by-Step Guide” alongside their mortgage disclosure documents. The book, created by the Consumer Financial Protection Bureau, is designed to give homebuyers the rundown on what they can expect during everything from filling out the initial application, to sitting down at the closing table.

Of course, there’s a lot to unpack within its pages. And on top of all the other paperwork you’re given when applying for a mortgage, the book is all too easy to cast aside. Here’s what the pros say are the most helpful tools included within the booklet. 

A worksheet to crunch the numbers

When you buy a home, your monthly expenses include more than just your mortgage payment. That is why Steve Sexton, a financial consultant and CEO of Sexton Advisory Group, says that when you’re crunching the numbers to see what you can afford, you’ll need to consider all financial aspects of homeownership. The toolkit includes a worksheet that will help you identify these costs (like real estate taxes and homeowners association dues) and then show you how to add them into your budget. 

“Just because the mortgage company approves you for a $400,000 mortgage does not mean you should go out and buy the biggest house you can get with that mortgage,” he says. “You want to calculate the total cost of ownership and make sure it fits into your budget and lifestyle.” 

Tips to polish your credit report 

Your credit history, income, and assets are some of the main drivers behind the interest rate you will qualify for when you apply for a mortgage. “To obtain the best interest rate, you’ll want to present your credit in the best light possible,” Sexton says. Put your best financial foot forward by reviewing your credit report for errors, keeping your credit utilization low by paying down your credit cards, and avoiding any large purchases during your application, Sexton says. The booklet points out that even buying a new fridge on credit could make it harder for you to get a mortgage.

Prompts for dealing with surprises 

The best way to avoid surprises at the closing table is to review (and understand) mortgage documents like your loan estimate and closing statement ahead of time. Sexton says doing this can help you make sure you’re not paying for anything you didn’t expect to, and give you time to ask questions before the big day. 

“Make sure you don’t sign any documents that you do not understand or [that] leave information out,” he says.

Worried about getting tongue-tied when it comes to bringing your questions up? Don’t worry, the toolkit has your back. The booklet has a column for conversational prompts to help you address a variety of questions and concerns, like rate locking and revised loan estimates.

Lots of added clarity

The book is structured to help borrowers understand the loan application process, which is something Casey Taylor, founder of Taylor Elite Group, says can be complicated. 

“Some of the highlights provide insight to understanding the basics of a mortgage when it comes down to affordability, credit, and loan types,” he says, adding that it also explains how to calculate your potential mortgage payment and the differences between fixed and adjustable-rate mortgages. “And finally, [it] provides some of the pros and cons of the loan process and how to avoid any pitfalls.” 

The 28-page packet has become required reading since it first began appearing in loan disclosure packets in 2015, but you don’t have to wait until you’re ready to apply for a mortgage to get a copy. If you want to get a jump start on the process you can get a copy of the booklet by visiting the Consumer Financial Protection Bureau site.