Applying for a Home Can Be Tricky. We Can Help.
Below we have provided essential do’s and don’ts of the home loan application process. Following these recommendations will help you be better prepared and loan ready!
- Do respond to your lender quickly & keep documentation ready.
Respond to your lender and return signed documents as quickly as possible so your loan may be processed and closed on time. Communication is key during this process. - Do provide all schedules of your federal tax return.
Your lender will require that you provide copies of the last 2-3 years schedules of your federal tax returns. You may also be required to provide copies of the last 2-3 years W-2’s. - Do provide all pages of your bank statements.
Your lender will require that you provide copies of the last two months bank statements. Be sure to include all pages, even if pages are blank. Every statement you send must be complete. - Do notify your lender of income changes.
If there are any changes from what was documented on your loan application, you must notify your lender as soon as possible.
- Do prepare for down payment and closing costs.
Your lender will have an in-depth conversation about your down payment and closing costs. If you need down payment assistance your lender will discuss available options for you. Inform your lender of the exact source from which your down payment and closing costs will be coming from. Please be aware that not all sources of funds are acceptable. Loan approval requires that all funds are documented and verified. - Do stay current on all of your bills.
Pay your bills on time and stay current on all existing accounts. Your financials will be checked several times during the loan process. - Do lower your credit card balances.
Keep credit card balances as close to zero as possible. This will help with optimizing your credit score, and additionally help for a better debt to income ratio.
- Don’t apply for new credit of any kind.
Every time you have your credit pulled by a potential creditor or lender, an inquiry is added to your credit and you will lose points from your score immediately. - Don’t pay charge offs or collections.
Paying a collection or charge off will only zero out the balance for the amount owed. Unless you can negotiate a delete letter, paying collections will decrease the credit score immediately due to the date of last activity becoming recent. - Don’t make any big purchases.
Making any big purchases such as a car or furniture can change your qualification for a loan. Big purchases can affect your amounts owed on your credit and bring down your score immediately, as well as affect your debt to income ratio, which can change how much house you can qualify for.
- Don’t make any unusual large deposits.
Money used for down payment on your home cannot be borrowed money and you must be able to prove that large deposits are not borrowed funds. A large deposit is defined as an amount more than 25% of any one borrower’s monthly net income deposit. To be safe, speak to your lender if you have any questions about questionable deposits. - Don’t change or quit your job.
Your lender will verify your employment at the time of loan approval and prior to closing. An individual with a new job does not have much history of job security, so lenders can see it as too big of a risk. Any kind of job movement before the loan closing can be detrimental.
Following these do’s and don’ts will help make the home buying process as smooth as possible. Good luck!
Questions About Your Credit? Contact Us Today!
For any questions regarding your credit and potential qualification for a home loan contact us today. Not only can we assist you with credit repair needs, but we can also refer you to professional lenders through the Loan Assistance Program and help you from beginning to end with our services.
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*The information in this article has been provided strictly for educational purposes.
