Home buyers are often not aware of how an innocent transaction such as making a credit card purchase or moving cash from one bank to another can jeopardize the mortgage approval process.
Here are a few of the more common areas of concern that all home buyers should be aware of:
Do not change jobs or put in for a leave of absence without your Loan Officer’s knowledge first. The change will be uncovered during the employment verification that takes place during the loan process and it could affect your ability to get approved. Bottom line, if you are thinking of making any changes to your employment or income, speak with your Loan Officer first.
DON’T MOVE YOUR CASH/SAVINGS AROUND:
Lenders are required to verify all funds for closing, including the source of those funds. Moving assets around between multiple accounts can create a paper trail nightmare. The best advice is to leave everything where it is, even if the purpose of the move is to pool your funds for buying the house. After your accounts have been verified and your loan is approved, you can consolidate your accounts if you want. Always consult your Loan Officer before you move any funds.
Lenders must verify all sources of funds used in a mortgage transaction. For any large deposits ($1000.00 or more) into your asset accounts (checking, savings, money market, etc.), you should be prepared to document the source. This could be a copy of the paycheck, bonus check, gift funds, etc. Before you make any large deposits, speak with your Loan Officer for instructions on how to do it right the first time.
REVIEW YOUR CREDIT REPORT:
The best way to get a jump start on your mortgage process is to know what your creditors are saying about you and the accuracy of the information. Request a copy of your report with your Loan Officer and confirm any inaccurate or OMITTED information. Credit reports are not always accurate, but corrections can be made quickly, as long as the proper documentation can be obtained.
CREDIT CARDS/NEW DEBT:
Do not apply for new credit of any kind. The creditor’s inquiry will show up on your credit report, and we will have to verify there is no new outstanding debt. Credit is typically monitored during the loan process, so any new activity will be uncovered before your settlement. If you are planning to add a debt or pay off debts before closing, wait until you have spoken with your Loan Officer first to make sure you won’t endanger your loan approval or settlement date.
DO NOT PACK ANY FINANCIAL PAPERS:
Keep all pages of your tax returns, along with any W-2’s, 1099’s, or K-1’s and any other financial papers from the past two years in a handy place. If you sold a home in the past two years, have your (HUD-1) Settlement Sheet Or Closing Disclosure handy. During the loan process, you may have to provide an document that you did not anticipate you would need.
BECOME A PAPER HOUND:
Save all pages of all bank statements and pay stubs from now until closing. They could be needed for your loan approval, so keep everything handy.
Gifts from relatives are very common in the purchase of a home, but there are specific ways a gift must be handled as to not create a paper nightmare for you. If you are getting a gift, hold off on receiving it until you have spoken with your Loan Officer. You will want to understand exactly how to receive the funds and what documentation would be required.
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