Mortgage Do’s and Don’ts
Things You Must Do
You have made the decision to purchase a new property. You don’t have the capitol to pay cash, so you have decided to move forward with a mortgage loan. Before you go any further, here are a few tips for Mortgage Do’s and Don’ts.
Do Keep All Financial Records In Order:
Understand that times have changed! Underwriting is a different game than it was 20 years ago. Underwriters are requiring more documentation than they did in the past. Just keep in mind, if it wasn’t important and they didn’t need it, they would not be asking for it!
If you are receiving any gift monies from relatives, they will need to document and sign a “gift letter” and an account statement evidencing the source of that gift which must be “seasoned funds”.
If you are currently renting, be sure to continue paying your rent on time while saving your proof of payment. If you are already a homeowner and a selling your current home, be sure to save your HUD-1 or more recently, your Closing Disclosure. If you have decided to keep your current home, but intend on renting it out, you may need to show sufficient equity, a lease and first month’s rent along with a security deposit.
Your Financial Records:
Keep all of your financial records organized and close at hand in the event underwriting requests more information from you.
Underwriters typically verify your income and tax documents with your current employer, CPA or IRS tax transcripts. Be sure to have saved at least 6-12 months of your current jobs pay stubs.
Save and organize any and all account statements from all of your accounts. Be sure they are numbered for each page saved. (i.e. page 7 of 7)
Be sure to keep making all of your payments on time! DO NOT make any credit purchase with a new line of credit or on your current credit accounts while going through the underwriting process! The underwriters WILL pull your credit the day of or just prior to your closing. A new line of credit or significant purchase could cause underwriting to deny your mortgage at the last minute, thus causing you to lose the home.
Things You Must Not Do
Apply For New Credit:
I can not emphasize this enough. Therefore, it warrants being mentioned again! Changes in your credit can and most always causes a delay in the loan process, change the terms and interest of your financing and may even prevent you from closing and purchasing the home all together.
If there is a situation where you must open a new line of credit (or even borrow against your IRA, 401k or retirement funds) consult with your Loan Originator first
Wait to Liquidate Funds From Stock or Retirement:
If you must sell some investments, do it as soon as possible and document the transaction. Don’t take the risk that the market could move against you leaving you short of funds to close. As always, consult with your Loan Originator before making any financial transactions.
Change Job During the Process:
If, during the loan process, you believe your job could possibly change due to a promotion, probationary period, careers or even status changes ( such as salaried to commission, leave of absence, new salary or bonus structure) consult with your Loan Originator immediately.
Make Undocumented Deposits:
Typically large, but even small undocumented deposits must be sourced unless they are already identified. Make and keep copies of checks and deposit slips. Avoid depositing cash and keep all deposits as small as possible.
Ever Be Afraid To Ask Questions:
If you are unclear or uncertain about anything you need or should be doing to ensure the loan process runs smoothly, ask your Loan Originator. They are the best person equipped to guide you through the process with little or no hiccups along the way.
If you are thinking about purchasing a home and need to take a mortgage out, but do not know who to talk to. Let me or Natalie know. We work with several Mortgage Lenders that are local and would love to assist you by getting you into contact with a trusted professional Loan Originator.
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