Buying a new home should be an exciting time in one’s life. Yet, many people are overwhelmed by the requirements for obtaining a mortgage. Fortunately, most stress-causing issues are totally avoidable!
Over the years, I’ve witnessed many buyer actions that were ultimately harmful to their mortgage process. However, a little foresight and preparation can result in time saved, less paperwork, problems avoided, and ultimately, a smooth home-buying process. If home buyers follow these simple guidelines, the result will be a much smoother experience:
DO make sure you pay all of your bills, including credit cards & car finance on time as you will have to explain any late payments in your history especially recent late payments which damage your scores more than historical blemishes.
DO be aware of the amount of debt you carry. Lower debt means lower payments but depending on your affordability, can also mean you can pay it off quicker which makes it easier for you to qualify for a mortgage.
DO be discerning when allowing a lender to run your credit. Get recommendations before you approach one. Too many inquiries over a few-month period will likely have an adverse effect on your credit scores.
DO save all of your financial documents. Your lender will require your most recent four weeks’ of paystubs, most recent two months’ bank statements (including ALL pages), and most recent two years’ federal tax returns. It’s possible your lender will require updated documents throughout your transaction as well.
DO provide ALL of the documents your lender requests, when they’re requested. A superior lender or loan officer knows and will request everything required up front rather than throughout your transaction so it is best to have all of this paperwork to hand to provide him/her and promptly.
DO communicate with your lender. If they contact you, there’s probably a good reason. Return their call!
DO inform your lender of any and all employment changes that may take place during the course of your transaction – no matter how insignificant they may seem! A new job, a change in title, or a change in pay rate or type can have significant consequences!
DON’T close credit lines or infrequently used credit cards. Contrary to popular belief, this will harm your credit, not help.
DON’T at any point during the course of your mortgage transaction – lease a new car, charge up balances on your credit cards, or apply for any new credit. . Whatever you want or need, wait until after you’ve closed before purchasing it.
DON’T keep your savings and investments spread out over dozens of different bank accounts. Documenting all of these accounts will be a logistical paperwork nightmare for you and your lender. It’s much simpler to document one or two accounts holding all of your funds as well as minimize your banking fees.
DON’T make any large deposits, cash or transfers, without talking to your lender first! All large deposits, regardless of their origin, must be verified back to their source via a paper-trail of documents and is often regarded suspiciously and subjective to the underwriter.
DON’T open, close, or transfer assets between different accounts unless absolutely necessary. This too creates more administration for everyone.
DON’T wait until the last minute to receive gift funds or liquidate investments, Remember, same as any deposits, the transfer of these funds one account to the other must also be documented. If you wait until the last minute, you may find your closing delayed because you’re waiting for your next bank statement or trade confirmation.
DON’T is to wait until after you’ve found a house before getting pre-qualified!
In the eyes of a seller or Realtor, a buyer who isn’t prepared is at a distinct disadvantage to other buyers who already have their financing in place. Be prepared months in advance to make an offer and avoid any unpleasant & disappointing surprises during the process.
By consulting with Premier Capital before you start your home search, we can ensure your transaction goes smoothly, your mortgage complements your financial plans, and helps you attain your financial goals.
Once you’re done with debt and you’ve started to save, it’s commonly the case that you’ll start hearing about the risks and rewards of investing in stocks or real estate. Unfortunately, it can be difficult for many people to know what type of investment is going to work better for them down the road. If you’re currently considering what you should put your money into, here are some reasons you may want to turn to real estate.