Jim’s Mortgage Corner | Immovable
THINGS TO DO BEFORE APPLYING FOR A MORTGAGE
1. Review your credit report. Order a free credit report through www.annualcreditreport.com and clean up all unpaid debts, collections, etc. and remove all surprises before applying for a mortgage.
2. Maximize your credit score. Although the stability of employment, income, existing debt, etc. All affect your ability to qualify for a mortgage, your FICO score has the biggest impact on your purchasing power. Your credit score can affect your interest rate and mortgage insurance. In most cases, the higher the credit score, the better your rates. The perfect combination of credit is two installment loans and three revolving accounts (credit cards, lines of credit) with balances below 30% of the high credit limit. If you are paying accounts, please do not close them. Over 50% of your credit score is based on payment history and the length of payment history, but only on open accounts.
3. Gather the documents. Now is a great time to start putting together all of the items your lender will need for your loan application. Some loan products may not require all of these documents, so it is a good idea to meet with your lender. The most common documents required when applying for a loan include:
– Last 30 days of pay stubs (consecutive)
– W-2 for the last 2 years
– Tax returns – the last 2 years with all pages (federal returns only), this will be required if you are self-employed and you will need personal and business returns (if applicable).
– Bank statement – last 2 months or where will the funds come from for your down payment and closing costs?
– Divorce decree and child support documents (if applicable)
4. Fund for closing. Many low payment options are available. It’s important for potential buyers to know that they probably don’t need a 20% down payment, but they should do their homework to understand the options available. There are programs that allow qualified buyers to buy a home with as little as 3.5% down. There are even options like VA loans and USDA loans with no down payment requirement for qualified applicants.
5. Get pre-approved. Stand out as a serious buyer and understand what you can afford.
6. Find a real estate agent. Contact a local professional to walk you through the process.
WHAT TO AVOID AFTER A MORTGAGE APPLICATION
Consistency is the name of the game after applying for a mortgage. Be sure to discuss any changes in income, assets, or credit with your lender so you don’t jeopardize your claim.
1. Don’t change your bank account.
2. Do not apply for new credit or close any credit accounts.
3. Don’t make large purchases.
4. Do not deposit money into your bank accounts until you have spoken with your bank or lender.
5. Do not co-sign other loans for anyone. Always fully disclose and discuss your intentions with your lender before doing anything of a financial nature. As always, I’m available to answer all of your questions about applying for your first mortgage.
Branch Manager, NMLS # 1721861
Cherry Creek Mortgage, LLC, NMLS 3001