Are you Sabotaging Your Own Home Mortgage?
The 5% deposit is saved? Check.
The prequalification letter is in hand. Check.
The house has been selected. Check.
What could possibly go wrong?
Buying a home is not a cookie cutter process. What worked for you may not work for your best friend. When working with a mortgage broker, loan officers are able to tailor fit your loan to your unique circumstances. While at its core each loan is about buying a home, the variables and moving parts continue to mystify buyers. It is the single most important financial transaction of your life. It can be exhilarating and exhausting. For some, it is short and sweet, for others it can be a years- long process dotted with legal problems.
Some of the variables are within your control. These can help speed the paperwork along, delay the home purchasing process or cause a deal to fall apart completely.
Verifications
If you’re currently paying rent, especially in cash, know in advance that it has to be verified. A payment history through bank statements, checks, or receipts. Find out acceptable ways of verifying payments with your loan officer and remember to be timely in delivering those records.
Your job verification. You may want to speak with your employer or the HR department of your company and let them know you’re purchasing a home. Find out the best way to contact the individual whom verifies that information and what that person needs from your loan officer. Make sure your loan officer has the contact information.
- Length of time on a job is a critical component of a loan, showing stability and ability to pay. Can verify at least two years of employment in your field?
- If part of the down payment is coming as a gift from a relative, the gift letter and gift funds amount must match.
Outstanding Payments
To be in a great position all payments must be ontime for the last 6 months to a year.
That said, there may be other issues lurking in your past you want to make sure are current. Here are a few that may not be top of mind.
- Make certain all liens, judgements and collections are addressed. If you haven’t taken a peek at your credit report, it might be worth the small expense to check it.
- Are you a co-signer on any other loans? Have they been paid on time?
- Be upfront about all businesses, mortgages and all income, including child support and other cash payments like tips. Unverified income (like cash tips) may not be able to be verified, and as a result would not be listed as income.
Financial documents
Know in advance of going into the loan process that your financial statements and tax records will be necessary along with all documents that verify who you are. These include driver’s license, green cards, and social security cards.
Due to federal, state and local laws, your loan officer is required to ask for particular pieces of information. You are not being singled out, this level of scrutiny is required for all buyers. It can be uncomfortable and feel extremely invasive. Your failure to produce needed documentation slows down the process, prevents some participants from completing your application and moving the loan forward. The longer it takes for you to get the papers to them, the longer the whole procedure takes. In some cases, losing the opportunity to purchase.
Additionally, withholding information that could derail your deal is an equal time waster and could end up not only costing you the desired home, but money as well. Your loan officer feels a certain obligation to help you get the best loan possible and make the procedure as pain free as possible. Your co-operation is a valuable asset to them. In the long run, you’ll be glad you did it when you celebrate moving into your new home.
- Keep any statements that declare credit card balances are paid to zero. (And keep them there.)
- Make sure all of your income taxes have been filed, including the year you are purchasing in.
- Do you have easy access to recent paystubs and tax documents for all parties on the loan?
- Be upfront about all expenses including other mortgages, co-signed loans, child support, medical and student loans.
Purchases
When it comes to purchases, you’re not safe to make any on credit until after the closing. From purchasing vacations, new vehicles, or even appliances for the new home, buying on credit before signing on the line is a no-no. If an urgent need should arise (like your car gets totaled in an accident) it’s best to talk with your loan officer about how best to navigate that event. Running out to get a new car may not be the best move until after your signature is dry and you’re handed keys to your home.
Additionally, vacations can pose problems if paperwork is needed and you’re not available to provide it. Purchases made on your credit card can affect fragile DTI and credit scores if you overspend.
If you have further questions about purchasing a home, refinancing or credit repair options, please call our office at 614-891-9000.
