Planning Ahead for the Perfect Mortgage Application
Advance preparation is the key to ease and simplification of the process
Yes, thing have changed — The easy “qualify on a pulse” loans are gone and things have tightened up but this is often exaggerated by the media and anyone else with a soapbox to cream from. The reality is that many of the guidelines that have existed for decades are simply being adhered to more diligently and the basic things like income, credit and a down payment matter once again especially with the roll out of the Qualified Mortgage.
Know what you will need:
Income — Typically, you will be asked for pay stubs, W2’s and tax returns. If you are self employed, this would include your business returns, sometimes a profit and loss statement and a business license or letter from your CPA. Written and verbal verification's of your employment may also be made and most programs now require that we obtain tax transcripts directly from the IRS to be sure that everything matches up.
Variable Income — Overtime, bonus, commissions and any other variable compensation cannot always be used for qualification unless it’s been received from the same employer for two years or more. If it’s very common to your profession, exceptions, can be made so never hesitate to check in with me to discuss this if it’s a confer.
Assets — you have to show that you have the funds needed to make your down payment and close the loan. The perfect application is one where all needed funds have been combined into just one account, been there for two months or more and does not show and deposits outside of regular payroll transfers.
Your Statements — When an underwriter reviews your asset statements, each one must include all pages. So even if one of the numbered pages (1 of 5, 3 of 3, etc.) is nothing more than a blank page or advertisement, hold on to it anyway.
Large Deposits — Deposits of $1000 or more (even less in some instances) often must be sourced. If they appear on your bank statements as transfers from one account to another or as payroll deposits, that’s fine. Unidentified funds however must be accounted for as underwriters must assure that these do not represent borrowed money. Plan ahead, make copies of checks and deposit slips and be especially careful when deposit-ing multiple checks from various sources or depositing cash — when in doubt, consult with me first.
Liquidation — If you are going to be selling stocks, bonds, other investments or even just borrowing against a retirement account, it’s better to do so at a point where you are no longer at risk for the mark value. Cashing out now and parking that in your savings account might cost you a few dollars in additional gains but it can also preclude a devastating drop.
If you own and are selling — Typically, you’ll need to provide a copy of the HUD-1 settlement statement from your closing.
If you own and are not selling — you’ll need to be able to qualify for the current and new him and if you need rental income to to do so, many programs require sufficient equity, a lease and copies of the first month’s rent and security deposit checks.
If you live with family — Underwriters will sometimes ask for a letter attesting that you live at your home rent address.
If you are renting — You will need to show 12 months of cancel cheeks evidencing timely payment or we will request a written verification from your management com pay. The perfect applicant writes their rent check on the same day each month.
Know where you stand with credit — A good credit report can be more then just a good FICO score. It’s best to know ahead of time if you need to build credit or if there are any erroneous information on your report that can owe a problem once you’re in the mortgage process. If you co-signed an loan for someone or took a loan in you name that you are reimbursed for by a relative or employer you’ll need copies of at leaf 6 months cheeks to show that they are the ones paying the bills. If you haven’t already started, use www.anualcreditreport.com to obtain a free consumer credit report every year.
Keep you scores hight — Avoid inquiries and taking out any new loans for cars or furniture or anything other that absolute necessities. Avoid new credit cards (even if you’re offered a 0% interest rate or 10% off your department store purchase). These things might save you a few dollars now but can cost you thousands of dollars later when it comes to securing the best interest rate on you home loan. Ex. saving 10% on a $225 purchase = $22.50. Paying — 125% more on a $225,000 home loan will cost you $23.48 every single month for as long as you have you loan.
Don’t change jobs — This isn’t always your choice and it may very well be to your advantage if it means a career employer will be the easiest to use. Most important is to know well ahead of time what works and what doesn’t and you’re already well ahead in that department jet by reading this information. A simple consultation is all that remains.
Ask questions — If you’re uncertain about what you reed or how to best prepare, I’m here to help you whether it’s long before you intend to buy or if you’ve already made an offer. Together, we’ll be sure to make the whole experience as stress free and efficient as it can be.