Mortgage lending: Start early and be organized

Contributed By: Tim Martin The key to a smooth process is to identify a mortgage professional early in the home buyer process who will guide you. Gone are the days of only looking for the best rate when selecting a lender. While a Loan Officer will help you obtaining a competitive priced loan, he or she will also need to prepare your financial documents in an organized fashion and help you understand the types of products available.

It makes sense to use a local mortgage expert rather than going to a big bank or internet resource.

Clients are exposed to the best of both worlds: a local mortgage expert with intimate knowledge of the real estate market paired with the backing a national lending organization which brings competitively priced products. In almost every case, the #1 key to success: starting early. Securing a preapproval before a potential home is selected and solidifying the financing in place can prove invaluable when preparing documentation, negotiating on a property, or expediting processing.

Navigating today’s tighter mortgage guidelines and its “cross every T twice” compliance environment can be daunting for even the most qualified borrowers. Everyone’s financial situation is unique. Regardless of your down payment, credit score, net worth, or other financial areas of strength, borrowers should expect to document all sources of down payment, show reserves, and verify income for the past 2 years. Even the strongest loans will require an organized underwriting file be assembled.

While speaking directly to a local Loan Officer is key, here are some tips to make your next mortgage go smoothly:

• Don’t buy or lease an auto if you plan to purchase a home soon! Lenders look carefully at your debt-to-income ratio. A large payment such as a car lease or purchase can greatly impact those ratios and could prevent you from qualifying for a home loan.

• Don’t move assets unnecessarily from one bank account to another! These transfers show up as new deposits and complicate the application process. You must disclose and document the source of funds for each new account. The lender can verify each account as it currently exists. You can consolidate your accounts after your loan closes, if you need to.

• Don’t change jobs! A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.

• Don’t buy new furniture or major appliances for your “new home”! If the new purchases increase the amount of debt you are responsible for on a monthly basis, there is the possibility this may disqualify you from getting the loan, or cut down on the available funds you need to pay the closing costs.

• Don’t use Your Credit Cards Unnecessarily! Only use your credit cards for normal purchases as you have done in the past. A new credit report will be ordered just prior to closing. New debt or significant increases in balances could affect your approved loan if your debt ratios increase.

• Don’t allow your credit report to be run while processing your mortgage! This will show as an inquiry on your lender’s credit report. Inquiries must be explained in writing.

• Don’t pack or ship information needed for the loan application! Important paperwork such as W-2 forms, divorce decrees, and tax returns should not be packed with your household goods. Duplicate copies take weeks to obtain, and could stall the closing date on your transaction.