Whether you want to refinance for a lower mortgage rate, get a new home mortgage, home equity loan or second mortgage, good preparation will make your transaction alot easier.
Allow me to give you some ideas that can make your mortgage experience less painful.
Gather your documents. You will have to produce 2 years’ complete tax returns, including W2s, 1099s, K1s, and all the schedules. Also, a month’s worth of pay stubs.
Be prepared to explain them. Deductions in your returns and your pay stubs may impact the income your lender will use to qualify you which, intern, has a big impact on the loan you will get.
Have a breakdown of base pay versus overtime for both your pay stubs and two years W2s. Lenders treat overtime (and bonus income) differently than your base pay. Be prepared to explain any changes over the last few years because your loan officer will ask you about it.
Start accumulating your bank statements. Lenders look back 3 months from when you sign your contract of sale.
You will have to explain any and all large deposits (which are defined as deposits greater than your regular pay check) because lenders want to make sure you haven’t taken out any new loans that aren’t on your credit report.
Avoid any significant cash deposits. If you did have a cash deposit understand that the lender will have you source it (a bill of sale).
If you will be receiving a gift, consult your loan officer on how to document it (from the donor’s ability to how you deposit it).
Ask your loan officer to run your credit and go over it with them. Believe it or not, most credit reports contain errors. Identify them and get working on correcting them as early as possible.
Do what you can to pay down your balances to under 30% of available credit to help you get the best score possible.
Do NOT close accounts or pay off collection accounts without discussing it with your loan officer. Either one of these logical moves actually can have a negative impact on your score.
When buying a home, remember BE PREPARED and we will create a smooth transaction for you!