Buying a house these days can be a sound financial decision. Low interest rates plus low house prices makes buying a house today something that is within the grasp for many families. As the market has continued to tighten from an underwriting perspective buying a house can be a simple process or it can be one with many hoops to jump through.
The absolute best possible advice would be to stay in communication with your lender and make sure the mortgage lender you selected for home financing knows you’re a complete scenario. If there is something you’re unsure of during the home loan process or even before, make sure to bring it to attention to your mortgage lender.
Buying a house with ease can be done, the process does not have to be drawn out or stressful.
Here’s what to do:
Gather all of your financial information together.
Income-This means providing your mortgage lender with two years of your federal income tax returns. If you are self-employed the mortgage lender will also need a copy of your business license and will also need a letter from your tax professional saying that you filed self-employed tax returns for the last two years. You will also need to gather your W-2s for the last two years from your employer. The most recent pay stubs for the last 30 days must also be provided. Additionally if you have a job that is seasonal or even where you take unemployment that is part of the job, this has to be documented and whatever information you provide with regards to income needs to be backed up with the verification of employment. The verification of employment is done by your mortgage lender when you’re buying a house to make sure the income you provided matches as well as to make sure you’re actually still employed. Most lenders do a verification of employment at least three times during the loan process with the last time being right before final loan documents are drawn.
Assets-Bank statements are going to be required for the last two months for any accounts where there is assets being used for loan qualifying purposes or assets being used for cash to close on your transaction. This also means a 401(k) statement as well as retirement account statements for the last two months or the last two quarters if the account is quarterly. Sometimes retirement accounts are even annually in which case the annual statement would need to be provided. If there is any difference being used when buying a house, the mortgage lender will require a bank statement and it gets letter from the person giving the gift so you can buy your house and the lender can have their paper trail needed for origination purposes.
Credit Make sure you’re paying your bills on time. This goes without saying, but there is a surprising amount of people that don’t do this regularly. If you have high credit card balances and unable to pay the balance is off, go to your credit card companies and ask them to increase your line amounts with out credit inquiries. Ask them to increase the line limits on each of your credit cards based upon your good payment history. Not all credit card companies will do this so you can buy a house, however many of them will. If you have any auto loans consider refinancing them. Interest rates not only on mortgages but also on auto loans are presently very low. If you can save $75 a month by refinancing your auto loan do it. It might just help you qualify with a lower payment so you can take on a house payment you’re looking to afford.
Here are some other tips so buying a house can be done with peace of mind.
The majority of mortgage loans go wrong because the mortgage lender was unaware of a financial component of the borrowers loan package.
Holding nothing back from your mortgage lender. Remember this person that’s putting your mortgage loan together has an enormously large responsibility in making sure your loan actually closes. Don’t you think it might make the best sense even if the information is negative to share that with your lender so they can help you buy a house stress free? Of course it does!
Your lender needs to know about the following 15 items:
- Leaving town during the loan process
- Changing hours at the office
- Taking vacation time
- Taking maternity leave
- Taking 2106 business expenses on your federal income tax returns
- Income changing
- Purchases using your credit card ( a big no-no especially during the escrow process)
- Cyclical unemployment with your job even if it’s customary
- Being married (on government loans such as an FHA loan or a USDA loan credit a credit report from the spouse is required)
- Be able to explain and paper trail large deposits into your bank account ( large deposits or anything that shows up in your bank account outside of your regular paycheck)
- Filing tax return extension
- Landlord’s contact information as well as previous ones
- Switching from being self-employed to W-2 (or vice versa)
- If self-employed sole proprietor-remember the mortgage lender will be looking at your schedule C. your net profit or loss.
- Marital status switching during the loan process
- Undisclosed debts (that might not show up on a credit report)
- Alimony or child support payments
- Salary and/or income dropping in the near future
- Job gaps in the last two years will need an explanation (hopefully jobs are within the same field)
- Explanations will be required on any money transfers between accounts
Buying a house as your primary residence, second home or investment property in any case, the mortgage lender will need to thoroughly examine your financial package.
Mortgage lenders require very tight scrutiny in underwriting these days because of all of the abuses and lending over the last several years. Fannie Mae and Freddie Mac are more concerned with risk than anything and that that risk can be mitigated by working with a local mortgage expert who understands underwriting, your process of buying house will be made that much easier.
Every mortgage company today has the underwriting requirements. It’s no different from a mortgage broker, to a mortgage bank or to a direct lender. All lenders today operate under the hub of Fannie Mae and Freddie Mac. No lender has a monopoly on the market today and as a result, it’s a level and fair playing field to qualify for a mortgage loan today.
Thinking about buying a house? Get a conventional or government mortgage rate quote to buy a house today. See where mortgage rates are for your loan scenario. There is no cost in zero obligation.
We will provide you with every mortgage tip so you can buy a house with ease.
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