Getting Your Mortgage Loan Application Approved With Minimum Stress
Understanding the common mistakes made during the loan process can eliminate the risks of paying too much for your mortgage, or a delay in settlement, or last minute denial of the loan.
Here are some frequently made mistakes by mortgage applicants and how to avoid them:
Not having your personal finances in order
Sort out your finances first when getting a mortgage. Some people start shopping for a home without thinking too much about whether their loan will be approved.
In today’s marketplace the underwriting and approval standards are much tougher. Just because you are only “looking” doesn’t mean you shouldn’t get the full approval for financing. Have your loan officer pull your credit early in the process to clean up any mistakes on the report (very frequent).
What documents should you have ready?
These documents now include but are not limited to:
pay stubs for the last 1 month
W-2’s for the last 2 years
2 months or 1 quarterly statement for all assets
a copy of your ID’s.
If you rent, your landlord’s contact information
Your employer’s human resource phone numbers – the lenders will call within 10 days of closing to verify you still work there
Know what is on your last 2 years tax returns as lenders are now getting a copy of your return from the IRS during underwriting. If you claimed any deductions outside of the standard, discuss this with your loan officer to make sure it won’t affect your approval.
Know what’s on your credit report. You can now get a free copy each year through www.annualcreditreport.com – this is the government website set up to assist people in obtaining a copy of their credit.
What if I need to make a “major” purchase prior to my closing?
Before you purchase anything on credit, discuss with your Loan Officer to avoid changing the debt to income ratios and possibly sabotaging your loan in underwriting. Lenders are now checking your credit report at the beginning of the loan process and just prior to closing (Fannie Mae requirement). If the debt to income ratio is out of limits, the loan will be disapproved at the last minute which could lead to default on the contract, loss of your escrow, and / or litigation by the sellers.
My boyfriend wants to help me with closing cost, can I just deposit the money he gives me in my checking?
Do not make the mistake of depositing undocumented funds into your accounts during the loan process. Every deposit is looked at by the underwriter on your bank statements. Underwriters require that you document all funds going in and out of your accounts. That means if your loved one gives you money, then they also need to give you a gift letter and a copy of the account that it came from.
These are just a few scenarios that occur during the documentation process. It is best to talk to a trusted loan officer in depth when you are thinking of buying a home. Discuss with them anything that is not typical about your situation, and most of all try not to be offended if asked for documentation that you find to be an invasion of your privacy, it is the unfortunate result of the last few years of mortgage fraud and foreclosures.
Please feel free to call me if you would like to discuss your personal situation!