Mortgages. The paper trail you will follow.

Mortgages. The paper trail you will follow.

If you have a new year’s resolution to buy a house in 2015, here are some things you can do to smooth the path to getting a mortgage. The paperwork does not have to be overwhelming, if you are prepared.

Avoid – unless absolutely necessaryconfused by paperwork

• Don’t transfer funds between accounts within 30 days of applying for financing. Example: If you transfer $10,000 from a long-term savings vehicle to your checking account, you will have to document the funds leaving and arriving at each account. It can cause unnecessary confusion. Underwriters don’t like confusion.

• Don’t make large (greater than $1,000) non-payroll deposits within 30 days of applying for financing. If you have large non-payroll deposits, find out how to document them from your lender. Then, keep a good paper trail.

• Don’t sell stocks or liquidate bonds. If you need to do this, find out how to document them before doing the sale.

• Don’t apply for loans or lines of credit, especially credit cards. Don’t buy furniture or any other big-ticket item on credit.  This can affect your credit score. Changes in your credit score can cause your mortgage to fail at the last minute.

• Don’t make large (greater than $1,000) financial purchases or transactions unless you do this regularly and can document them.

paperworkThese things help!

• Do save and gather 30 days most recent pay stubs and bank statements. (Some lenders want 90 days.)

• Do make sure you have your most recent two years of federal income tax returns and W2s available.

• Do pay your bills in a timely fashion, especially credit cards. Missing payments is a big ding to your credit score. Beware of store credit cards; they are easy to forget about and then miss a payment.

• Do keep your credit card balances below 10% of the maximum. Even better, avoid any balances, if possible.

• Do make copies of gift checks and obtain gift letters prior to depositing funds (if gifts are necessary.) The underwriter is responsible for checking that additional funds into your accounts are not loans (too much debt increases your risk of default.)

• Do be prepared for the underwriter to request detailed follow up documentation regarding past addresses, legal agreements, etc.

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By | 2016-12-28T14:01:08+00:00 February 4th, 2015|Categories: House Hunting, Mortgage matters|Tags: , , , , , , , |

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