Focus On Financing

Planning for a Mortgage Application

Planning ahead for your mortgage application will increase your success of owning a home. 

I see it many times… people call me interested in starting the home buying process, but after we hang up they lose motivation to gather their documents and follow instructions that I provide. Buying a home doesn’t happen overnight or sometimes even over a few months. Buying a home takes a game plan. One that if executed, will put you in the position to purchase a home seamlessly and without headaches. Knowing what to expect can increase your success of owning a home without the most common obstacles and/or stress. Take some time and study the the following bullet points and familiarize yourself each item.

Here is the list of the items and important points to consider before entering the pre-qualification stage. These items are critical to getting a quick turn around time and to improve your motivation to move forward.

Income:

  • Provide your last two pay-stubs along with your W2s and Federal tax returns for the last two years (include all schedules). State returns are not needed.
  • If you are self-employed, ask me for the additional documentation requirements.
  • If you receive bonus or commissions or have changed your job or position, let’s talk.

Assets:

  • Combine all the funds needed to close into one account at least two months prior to your application.
  • Document any other deposits here as each could be scrutinized.

Your Statements:

  • Save all pages of your asset statements, even if some are blank or advertisements.

Deposits:

  • Make copies of checks and deposit slips to prove they are not borrowed money.
  • Deposit checks individually.
  • Don’t deposit cash without clear proof of the source.

Liquidation:

  • If you are going to sell stocks, bonds, investments or borrow against a retirement account, do it now. Cashing out now may cost you a few dollars in additional gains, but it also protects against losses.

Current housing:

  • If you own and are selling, provide a copy of the HUD-1 settlement statement.
  • If you own and are not selling, you’ll need to qualify for both homes or meet the requirements for renting the current.
  • If you are renting, show 12 months of canceled checks demonstrating timely payments and/or written verification from your management company (Case-by-case). Ideally, pay your rent on the same day each month on or prior to its due date.
  • If you live with family, you may need a letter stating that you live rent-free (I will advise if this is needed upon our consultation).

Credit:

  • Check your credit report at www.annualcreditreport.com. I will need to run your credit using our credit service, but checking your credit in advance with this FREE service prior to your application will help you know approximately where you stand. Remember, your credit doesn’t have to be perfect.
  • Identify any errors now and consult with us for the correct action to take.
  • If you co-signed a loan or are being reimbursed for a loan that’s in your name, you’ll need at least twelve months of checks to exclude it.
  • Avoid new credit or inquiries. These can lower your score and increase your rate.
  • If you have more than one credit card that are maxed out, this would be a good time to drop those down to at least the halfway mark.

Employment Stability:

  • Ideally, you’ll have two years or more with your current employer.
  • Consult with us before changing employers, position or method of compensation. For example, don’t switch from salary to commissions.

I’m here to help you now, not just once you’ve found a home. Contact me with your questions and/or if you need a game plan drawn. 

June 10, 2016 by · Leave a Comment

About Steve

Steve is an experienced Sr. Loan Officer & Mortgage Planner located in Rancho Cucamonga and serving the Inland Empire and surrounding areas. Steve prides himself at being transparent with all his clients using sophisticated tools and concepts to make sure the right program is chosen. Call Steve Chavarria at 951-662-3389.

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