Mortgage basics!

You have made the big decision!  It's time to buy a home….now what?  Once you decide you want to buy a home, you need to talk with a loan officer to see what the best program is for you and how much you will qualify for.  One of the questions I ask my customers is "what are you comfortable with in a house payment?"  That information gives me an idea of what they want to spend and also may tell me if they are being realistic or not.  Most clients these days are being very conservative in what they want to spend, which will help us on the road to economic recovery.

Once you decide it's time to buy, you need to gather several things for your loan officer.  Most mortgage companies want to see the basic information – 1-2 recent paystubs, two years of w-2's along with your federal tax returns, 1-2 months of bank statements.  You may also need a divorce decree if it applies to you (if you pay or receive child support or have a home that your previous spouse is now responsible for), investment account statements if that is where money is coming from for the down payment, business tax returns if you are self employed VA documents for VA loans. 

Your loan officer will pull your credit report and calculate your income.  They will look at your debt ratio and figure out what you can afford and qualify for.  They should run your file through an automated underwriting system.  They will explain different programs to you and help you decide which program is best for you.

Make sure that you are making your payments on time, if you aren't sure, check with your lender and see what your credit looks like.  If you transfer money between bank accounts, try to limit the transfers.  Your lender will need to see all your bank statements so they can determine where the money is for your closing and if you have enough.  If there are a lot of transfers, it can make it more difficult to determine how much cash you have. 

Once you have applied for a mortgage, make sure you don't open any new accounts, do not apply for any additional credit.  If you have any job changes, make sure your loan officer is aware of the changes.  If you sell something and deposit the money in your bank account, you will need a description of what was sold, a copy of the check and something to show the value of what was sold.  I recently had a client sell a motorcycle, she had a copy of the check and I was able to go online and get documentation to show what the value of the motorcycle was, along with a picture of the bike, etc. 

Because lenders now have to verify employment and credit right before closing, we will check with employers and update credit.  If there are any changes, let your loan officer know so they are aware of any possible changes.

Due to all the changes we have had over the last couple of years, homebuyers need to know that it takes a little more work to get your mortgage approved.  It's not necessarily harder, but there is more documentation required now than there had been for several years!  For those that have bought homes in the past few years, it may seem like we are asking for everything including the kitchen sink!!  We don't try to make it harder, but we do need to document everything.  The more information we have in the beginning of the process, the easier the final mortgage approval will be!

Leslie Vanderwerf,  NMLS ID#335509, Summit Mortgage - Email – Website