Two: Reduce Your Debt
The fewer credit cards you carry - and the
lower the balances - the better. That's especially true if you have
other debts such as a car or student loan. However, don't pay down or
pay off balances with cash intended for a down payment. Even if you
choose a low-down payment option, you're going to need cash available
to pay the down payment and closing costs.
The easiest way to improve your debt picture is to close all dormant
credit card accounts. Contact card issuers and ask for instructions on
closing the accounts (for instance, you may be asked to cut up your
card and return it by mail). Instruct the card issuer in writing to
enter into your credit report, "Closed at request of cardholder." That
way, there won't be any reason to suspect that a credit problem caused
the account to be closed.
Three: Solidify Your Savings
If you're like most people planning on
buying a home, you need to reduce your spending to save up for a down
payment and closing costs. It's never too early to review your
spending, cut out excess spending and set a budget.
Four: Review Your Credit
It's important to understand if there are
problems or errors that could affect your ability to qualify for a
loan. To do this, you'll want to get a copy of your credit report.
Because these reports contain your credit history, it's important that
you're aware of what they contain - and whether the information is
accurate. You might have excellent credit, but odds are 1-in-4 that
you'll find an error in your report. Look for mistakes, such as
accounts that are not yours. When you find errors, contact the
creditors by phone or mail to correct the error. Then get another copy
of the report 30 to 60 days later to make sure the corrections have
been made. Click here for more info on
credit scoring.
HOW DOES THE LOAN PROCESS
WORK?
Organize your
documents
If you are buying or refinancing a home
If you are salaried: provide two years W-2 and one month of
paystubs OR if you are self-employed: provide two years tax
returns and a YTD profit and loss statement.
If you own rental property, please provide rental agreements and
two years tax returns.
If you wish to speed up the approval process, please also provide
three months bank statements for each bank, stock and mutual fund
account.
Provide recent copies of any stock brokerage or IRA/401K accounts
that you may have.
If you are requesting a cash out refinance please provide a
letter explaining what you plan to do with the proceeds.
Provide a copy of divorce decree if applicable.
If you are NOT a US citizen, provide us with a copy of your green
card (front & back) or, if you are NOT a permanent resident
provide us with your H-1 or L-1 Visa.
If you are applying for a home equity loan
If you are salaried: provide two years W-2 and one month of
paystubs OR if you are self-employed: provide two years tax
returns and a YTD profit and loss statement.
If you own rental property, please provide rental agreements and
two years tax returns.
Please provide a copy of the note on your first mortgage. This
will normally be found in your closing loan documents.
Please provide a signed letter explaining what you plan to do
with the proceeds.
Provide a copy of divorce decree if applicable.
If you are NOT a US citizen, provide us with a copy of your green
card (front & back) or, if you are NOT a permanent resident
provide us with your H-1 or L-1 Visa.
Get Qualified
Getting qualified before you apply for a loan can help you
understand how much you can borrow.
When buying a house, you may get pre-qualified or pre-approved.
You can typically get pre-qualified over the phone or on the
Internet in a few minutes. A pre-qualification is not as
beneficial as a pre-approval where you have to go through a more
rigorous process which includes verification of your credit,
income, assets and liabilities. It is highly recommended that you
get pre-approved before you start looking for a house. This will
help you:
Find out the maximum house you can buy, so you don't waste time
looking for properties you cannot afford.
Puts you in a stronger position when you are negotiating with the
seller because the seller knows that your loan is already
approved.
Helps you close
quickly, since your loan is already approved.
Shop loan
programs and rates
To shop for a loan you will need to:
Think about how long you plan to keep the loan. If you plan to
sell the house in a few years you may want to consider an
adjustable or balloon loan. On the other hand, if you plan to
keep the house for a longer time, you may want to look at fixed
loans.
Understand the
relationship between rates and points. Points are considered to
be prepaid interest and are tax deductible. Each point is equal
to one percent of the loan. So for example 1 point on a $150,000
loan is $1,500. The more points you pay, the lower the rate you
will get.
Compare different
programs. Shopping for a loan can be difficult. With so many
programs to choose from, each of which has different rates,
points and fees, it's hard to figure out which program is best
for you. That's where an experienced loan officer can help you
make a decision that's best for you.
Obtain Loan Approval
Once your loan application has been received we will start
the loan approval process immediately. This involves verifying
your:
Credit history
Employment history
Assets including your bank accounts, stocks, mutual fund and
retirement accounts
Property value
Based on your
specific situation, additional documents or verifications may be
required. To improve your chances of getting a loan approval:
Fill out the loan application completely.
Respond promptly to any requests for additional documents. This
is especially critical if your rate is locked or if you plan to
close by a certain date.
Do not make any major purchases. Do not buy a car, furniture or
another house until your loan is closed. Anything that causes
your debts to increase might have an adverse affect on your
current application.
Do not move money
into your bank accounts unless it can be traced. If you are
receiving money from friends, family or other relatives, please
contact us.
Do not go out of
town around the closing date. If you do plan to be out of town
when your loan is expected to close, you may sign a power of
attorney to authorize another individual to sign on your behalf.
Close the Loan
After your loan is approved, you will be required to sign the
final loan documents. This will normally take place in front of a
notary public. Be prepared to:
Bring a cashiers check for your down payment and closing costs if
required. Personal checks are normally not accepted.
Review the final
loan documents. Make sure that the interest rate and loan terms
are what you were promised. Also, verify that the name and
address on the loan documents are accurate.
Sign the loan
documents.
Your loan will
normally close shortly after you have signed the loan documents.
On refinance and home equity loan transactions federal law
requires that you have 3 days to review the documents before your
loan transaction can close.
Give Toni a call or send an
email now
to employ her expertise for
your loan transaction!
