Major things TO DO or AVOID doing:
Any one of these actions may greatly impact your ability to qualify
for a mortgage loan.
KEEP ANY FINANCIAL PAPERS HANDY
Collect your important financial papers and put them in a convenient
and secure place. These include: W2s, Federal tax returns, 1099s
for investments and social security, K1s and social security award
letter for the most recent 2 years. Start saving paystubs, banks
statements, retirement funds statements, and proof that you have
paid your rent. If you sold a home in the past 24 months, include
the settlement sheets you received when you closed. If in doubt
whether to save a financial document, do it.
ASK FOR A PRE-APPROVAL LETTER
A pre-approval letter tells you the dollar amount of the price
of the house you can afford to buy. A pre-approval letter helps
you and your agent negotiate for the best price you for the house.
Your loan officer determines the amount you can afford by reviewing
your credit report, W2s, tax returns, paystubs, bank statements
and retirement funds statements.
DON'T MOVE CASH AROUND
Leave all your funds where they are! Even if you think pooling
your funds is a good idea when you are buying a house. ALWAYS
consult your Loan Office BEFORE you move any funds.
DO NOT APPLY FOR ANY NEW CREDIT OR PAY OFF DEBTS
DO NOT apply for ANY new credit even if you are thinking about
purchasing a new home. Wait to apply for new credit until AFTER
you have closed on your mortgage loan. TALK TO ME BEFORE you pay
off any debts.
DO NOT CHANGE JOBS
Changing jobs during the loan application process can jeopardize
your approval for a mortgage loan. If you do plan to change jobs,
BE SURE to tell your Loan Officer before, during and after the
loan application process.
DO BE PREPARED TO DOCUMENT WHERE LARGE DEPOSITS CAME FROM
We will be identifying any large deposits into your checking,
savings, or money market accounts. Be prepared to provide documentation
for who any large deposit came from, such as paycheck, bonus check,
money received from the sale of an asset. NOTE: deposits made
in cash must be documented also; AVOID cash transactions; cash
deposits may not be included when determining the total amount
of your assets.
IF YOU SELL SOMETHING TO GENERATE MONEY FOR YOUR HOME PURCHASE
If you sell an asset such as a car, antique, collection, etc.
to generate money for closing costs, SAVE COPIES OF THE DOCUMENTS
involved with the sale, such as: car title, bill of sale, check
you receive from the buyer. You may need a certified appraisal
for large ticket items.
RECEIVING AND DOCUMENTING GIFTS OF FUNDS FROM RELATIVES
Federal regulations allow you to receive gifts from relatives
to help with the purchase of your home. Be sure to:
Tell me when you apply for your mortgage loan
that you may be receiving a gift from a relative
DO NOT take possession of the funds until AFTER
you have spoken to me
DO NOT take cash
Tell the donor to be prepared to complete the
gift letter form we provide and to show documentation for the
funds coming out of their checking account
WHAT TO START COLLECTING BEFORE YOU APPLY
FOR A LOAN
Lenders require a lot of documentation so it's a good idea to
start collecting some of the things you'll need to bring to your
loan application beforehand. To save yourself time and frustration
during your loan process, start gathering all the documentation
listed below as soon as possible.
1) For Your Residence History:
a) Your previous addresses for the last 2 years and how long you
lived in each place
b) If you currently rent, your landlord's name and address (for
the last 12 months)
2) For Your Employment History:
a) The names and addresses for all your employers for the last
b) The dates you worked at each place of employment
c) A letter explaining any gaps in your employment in the last
d) Original paystubs for the last 30 days
e) Most recent 2 years W-2's
f) Most recent 2 years 1040's
g) Year-to-date profit and loss statement and current balance
sheet (if self-employed)
h) Transcript or diploma if you were a student in the last 2 years
i) Award letter and copy of most recent check for retirement,
Social Security or disability income
3) For All Outstanding Loans and Credit Cards:
a) Coupon book or most recent statement for every account you
4) For All Savings, Checking or Investment Accounts:
a) The name and address for each financial institution and the
b) The current balance or value
c) 3 months bank statements on all accounts
d) 3 months statements for any IRA'S, Keogh's, 401 K's or profit
sharing you have
5) For Personal Property You Own:
a) The net cash value of your life insurance
b) The make, year and value of your automobiles
c) The value of your furniture or other personal property
6) For Real Estate You Currently Own:
a) The property address
b) The estimated market value, outstanding loan balance and the
amount of your monthly payment.
c) The amount of your monthly rental income (if applicable)
HOW TO INCREASE YOUR PURCHASING POWER
There are several factors that lenders take into consideration
when determining how much they will lend to you for your home
purchase. The three most important factors are your income, debts
and downpayment. Any one of these factors can greatly impact the
amount of mortgage you qualify for. Lenders are primarily concerned
with the percentage of your gross monthly income that goes to
your new monthly housing expense and to your new monthly housing
expense plus your other monthly debts. As a general rule, no more
than 28% of your gross monthly income should be going towards
your monthly housing payment and no more than 36% of your income
should be going to your housing payment plus other monthly debt.
These guidelines vary by the amount of downpayment you make and
the loan program you choose.
If you have been pre-qualified and are not satisfied with the
amount you qualify for, we've listed four of the most common obstacles
to qualifying for a home loan below and some possible solutions
1) Excessive Long-Term Debt
a) Consolidate your debts by taking out one loan and paying off
your bills with the money.
b) Pay off long-term debts by using some of your cash and making
a lower downpayment. Selling an asset to pay off debt is another
2) Inadequate Income
a) Income from alimony, child support, bonuses, overtime or future
raises might be considered in qualifying. If you've overlooked
any income, be sure to tell your loan officer.
b) Find a co-mortgagor who is willing to go on the loan with you
to help you qualify.
c) Make a higher downpayment.
d) Consider a financing option that will allow you to stretch
your purchasing power. Some of these options include FHA loans,
adjustable rate mortgages, balloon financing or a graduated payment
3) Credit Problems
a) Repair your credit file by contacting creditors and requesting
that negative information be removed.
b) Pay off outstanding judgments, liens and collections.
c) Re-establish good credit.
4) Lack of A Downpayment
a) Get a gift from an immediate family member.
b) Ask the seller to carry back financing.
c) Sell or borrow against an asset.
d) Borrow against or cash out your 401 K.
e) Ask the seller to contribute towards closing costs.
f ) Obtain a low point or zero point loan.
g) Consider financing options that offer lower downpayments and
help with closing costs.
Pay off high interest credit cards and loans into one low monthly
payment! Apply now for a debt consolidation home loan. With an
debt consolidation loan, you can save up to $500, $600, or even
more every month by paying off your high interest credit cards
and consumer loans. And you can do this even if your credit is
less-than-perfect! We even have loans that require little or no
equity in your property.
This may be your golden opportunity to re-establish your credit...recover
from overwhelming debt...or consolidate your high-interest debt
into one easy, low-interest monthly payment. Because you may qualify
for a debt consolidation loan. Our friendly staff is ready to
help you! Start by applying online - even if you have been turned
a look at just how much you could save!
*Monthly payments based on a 15 year fixed loan with an
APR of 12.831%. This is an example only. Actual monthly
payments, closing costs and APRs may vary.