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 Diana a call or send an
email now to employ her
expertise for your loan transaction!
Equal Opportunity Lender
