Awesome post! Have seen a lot of these happen during a transaction. Buyers need to do their homework and make sure they know what they're doing to help the lending process and not hurt it. Check it out:
6 Tips For a Smoother Mortgage Transaction
After closing hundreds of mortgage loans I have seen the same basic issues pop up on many transactions. Below are five things to keep in mind during (and before) your Mortgage process that may make things a little smoother for you or someone you know!
1. Don't Move Money Around Without Documentation During the loan application process, we will have to confirm your income and assets listed on the application you have submitted. Moving these funds can create confusion and ultimately result in a huge headache, indefinitely slowing the process down. If you must move money around remember that we will need to see bank statements showing where the money went and where it came from.
2. Document Large Deposits and Deposit Cash EARLY One of the biggest enemies of a smooth loan transaction is the large deposit/ cash deposit. We will need to verify all sources of money for the transaction. This includes all large deposits into both checking and savings accounts. Be prepared to document everything. Keep records of everything. Sometimes you may have a lump payout of a retirement account or sale of your baseball card collection. You may have a yearly bonus that is deposited. Save everything that is involved with those transactions. Your funds need to be in your account for 60 days in most cases so mysterious deposits don't cut it. We need to show where most deposits came from. If you are depositing cash then it needs to be "seasoned" 60 days and not show on your current bank statement as a deposit . Don't wait until your offer is accepted, deposit the money NOW.
3. Don't Charge Up Your Credit Cards Or Make Large Purchases Many times credit documentation will expire during the loan process and new credit will need to be pulled. If you have incurred debt since the initial application it WILL be counted against your debt ratios and you may no longer qualify. If you have any pending purchases let your loan officer know. This can be anything from buying appliances for your home to buying a new car when your lease expires.
4. Be Sure To Have Letters of Explanation for EVERYTHING The current lending environment is one of document, document, document. It may seem like we are asking for everything except your 5th Grade Report Card. Well, keep that too.. Letters of explanation make it easier to have your loan approved and you should have them ready for: any period of time where your income was reduced, bankruptcies, foreclosures, credit pulls in the past 90 days, property sold in the past year, name changes and frequent job changes. There is nothing you can hide from an Underwriter. They find out everything. Giving letters of Explanation up front can turn a questionable loan into a solid one.
5. Be sure to keep updated copies of your Bank Statements and Paystubs.
You will be asked for them multiple times. Make sure you have all pages of your bank statements each month and copies of every paystub. It will make things less stressful for you later.
6. Be Sure to Apply Early Our final step to making your mortgage process run smoothly is to apply early. Don't wait until you have found a home and are ready to put in an offer. We are thrilled that you found a home at 9:00 on Sunday Night and want to to put an offer in! But if we are not immediately available then it seems like quicksand for you! Prequalifying early and getting your required documents in at the start of your process can make a tough mortgage alot smoother!
If you are glued to your lender during this process and asking him every time you fill up for gas then you are moving in the right direction! Asking questions during the process may seem like a pain, but those 5 minute conversations could save you MONTHS of headaches during your transaction.
* Mortgage News, Knowledge and No-Nos! * * KEITH PENTZ * * PROSPECT MORTGAGE *
Senior Loan Officer/Certified FHA 203k Specialist
Prospect Mortgage- Greater Worcester
324 Grove Street, Worcester, MA 01605
Apply 24/7 @ www.prospectworcester.com