In today’s challenging lending environment, loan applicants often try to be the best candidate possible by painting the most optimistic picture about their debt, credit and affordability goals.
While it’s important to put your best foot forward, it’s even more important to be honest, open and forthright so your mortgage adviser can customize a mortgage and financial plan that fits.
With that in mind, here are a few things that will help move your loan application forward and give you the best chances for success:
Be open about your entire debt portfolio.
Student loans, car loans, small business loans, personal loans and credit cards are some of the most common and high profile elements of a “debt portfolio.” Associated payoff amounts, loan terms and payment histories directly affect your credit worthiness.
It’s important to divulge the entirety of your debt portfolio so your mortgage adviser can guide you through the loan application process. Surprise debts can slow down the process and could jeopardize a potentially great loan!
Know your credit score.
In a challenging lending market, your credit score is the single most important factor in determining your credit worthiness. For the potential lender, it’s the most accurate demonstration of your debt-to-income ratio and your ability to pay down debt effectively and on time. Your mortgage advisor will check your score with a “merged” report from all three credit rating agencies – Equifax, TransUnion and Experian. This gives you the most accurate overlay of credit information – and will eliminate any potential hiccups!
Express your lifestyle intentions and financial goals.
People buy homes for many different reasons. Some may purchase a single-family home in order to raise a family while others might buy a condominium with the intention of buying a house a few years later. Still, others might buy a townhome purely for long-term investment purposes. No matter the reason, it’s important to express your intentions to your mortgage adviser to help them guide you to the appropriate loan package.
For instance, if you’re a newly married couple planning to raise a family, you may be looking to establish good credit knowing that you’ll quickly outgrow your first condominium. Hence, a more aggressive, variable rate loan program might best serve your short-term needs. A 5/1 ARM, for example, keeps your interest payments low for the first few years of wedded bliss – making it easier to buy a home when the tots arrive!
Gather the appropriate documentation prior to application.
The loan process takes a little longer than it did a few years ago. And since most loan locks last for 30 days, it’s a good idea to have all of your documentation at the ready. That way your mortgage adviser can strike when fluctuating mortgage rates are most favorable to you and your needs.
Prepare the following documents:
• Recent paystubs
• Two years of year-end W-2’s
• Recent bank and asset statements (Note: be sure to include all pages. Believe it or not, this includes the one that says “this page intentionally left blank.”)
• A copy of your driver’s license
• Copy of purchase agreement (if applicable)
Try to get the cleanest copies of all your documentation. A smudged, blurry or faded copy or fax will slow things down!
These items will help you prepare for the loan application process. If you have any questions or wish to get started in earnest, call your mortgage adviser for a free, in-depth consultation.
AUTHOR: KEN PERLMUTTER