Do’s and Don’ts When Buying a Home
Don’t move money around and don’t buy a car while trying to buy a house
Given the high amount of foreclosures in the past few years, lenders have tightened requirements for loan approval. Now, buyers and mortgage brokers have to jump through a lot of hoops in order to get loans approved. It is mission critical that you work hand-in-hand with your mortgage broker and/or lender and have a high tolerance for providing requested documents, no matter how many they request. If you are self-employed, you will have to jump through even more hoops. If you have an excellent mortgage broker, he or she will be able to prepare you for what you will need to do.
Make sure you have proof of the source of funds you will use for your down payment and closing costs. You will likely need to provide copies of the last two months of your bank statements and stock statements. If you have moved funds between accounts, you will need to have a paper trail of those transfers. It’s probably best to leave your money where it is until you have confirmation from the lender that you are clear to close. You may even need to provide copies of cancelled checks and deposit receipts. It is important that you have patience and cooperate fully.
Keep in mind that your FICO credit score needs to be as high as possible. If you buy a car or other large ticket item, this can drop your credit score and make it more difficult to obtain a home loan. Before paying off credit cards or making purchases, speak with your mortgage broker or bank. Credit scores are tricky, so do not assume that doing something logical will help. However, here is one quick tip that raises most folk’s score: go to www.optoutprescreen.com. Do not opt out permanently, just do so for 5 years.