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When you are buying a home the first thing you need to do is get pre-approved. This is different from pre-qualifying as it is a full loan approval instead of simply an opinion letter of your creditworthiness. Its is best that you take this step before looking at homes as finding out what you qualify for will help you look in the right price range and avoid disappointment. On the flip side, you might be able to look at more expensive homes than you originally thought possible.
Here are some things your lender will need (and need you to do or not to do) during the application and escrow process):
1) All funds used for the downpayment and closing costs need to be carefully scrutinized by your lender.
- You must provide detailed and accurate information to show which accounts the funds are in and where the funds are coming from.
- You must document the source of any funds that have been in your accounts for less than 2 months.
- Any changes that occur to your financial condition will need to be explained to the lender.
- Changes to your assets, employment, income or credit scores during the escrow process could jeopardize your ability to obtain a loan.
- Provide complete documents – all pages!
- Provide documents with names, addresses and account numbers.
2) Things not to do during the escrow process:
- Do not transfer funds from one bank account to another.
- Do not make unusual large deposits into your bank account or you will need to provide documentation for the source of any deposits.
- Do not buy a car just prior to buying a house of during the escrow process.
- Do not spend large sums of money buying furniture or appliances.
- Do not change jobs.
- Do not apply for new credit cards.
- Do not close existing credit cards.
3) The lender is going to require a letter of explanation and/or support documentation for:
- Recent inquiries on your credit report.
- Derogatory items on your credit report.
- Recent deposits into your bank account.
- Recent transfers of money from one account to another.
- Evidence earnest money deposit has cleared your account.
4) If you are receiving gift funds the lender will require:
- A gift letter signed by you and the gift donor.
- Evidence of the donors ability to gift the funds – a bank statement.
- Evidence of the receipt of the gift funds – a copy of the check or wire.
- Evidence of the funds being received into your account.
If you have questions or are looking for a wonderful lender, give me a call today at (408) 410-2060!
Looking for something to do this month? Take a look at this calender of events for our local area to help you get out and enjoy the beautiful weather! May 2013 Events Calendar
As always, feel free to call me for all your real estate related needs! Happy Spring!
1) Don’t buy or lease an auto – Lenders look carefully at your debt-to-income ratio. A large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan.
2) Don’t move assets from one bank account to another – These transfers show up as new deposits and complicate the application process as you must then disclose and document the source of funds for each new account. The lender can verify each account as it currently exists. You can consolidate your accounts later if necessary.
3) Don’t change jobs – A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.
4) Don’t buy new furniture or major appliances with a credit card – If the new purchases increase the amount of debt you are responsible for on a monthly basis, there is a possibility this may disqualify you from getting the loan or even cut down the amount of available funds for closing costs.
5) Be aware of who runs your credit report – This will show as an inquiry on your lender’s credit report. Inquiries must be explained in writing.
6) Don’t attempt to consolidate bills before speaking with your lender – The loan officer can advise you if this needs to be done.
7) Don’t pack of ship information needed for the loan application – Important paperwork such as W-2 forms, divorce decrees and tax returns should not be sent with your household goods. Duplicate copies take weeks to obtain, and could stall the closing date on your transaction.
If you need help finding a reliable & reputable lender, give me a call! I have some fantastic lenders I can refer you to to qualify you for buying a new home.
Looking for something to do in the Bay Area this weekend? Check out the link below for a list of some great holiday and seasonal events! From Christmas in the Park to holiday light shows, you will find a variety of events around the South Bay here December 2012 Event Schedule!
Have a wonderful December!