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These are some of the things that homeowners and borrowers must try to adhere during the refinancing or home buying process:

  • Do get your Pre-Approval before going house hunting.
  • Do have these items on the checklist readily available.
  • Do check your credit report yourself. So much is depending on the scores and the content of the credit report. Eliminate any surprises early on during the process such as unknown collections, late payments, judgement or tax lien and disputed accounts.
  • Do your shopping for mortgage rates within the first 30 days of loan application. This will reduce the impact on the credit scores and makes it easier for us to explain on all those inquiries.
  • Do not open a new trade line, apply for a new credit card, departmental store, auto loan, co-sign a loan or anything that will impact the credit scores and create more liabilities (wait until you have at least received the key for your new house first).  In today's strick underwriting guidelines, borrower's Debt-to-Income (DTI) ratio must no go over 45%. This rule is further restricted with implementation of Qualified Mortgage rule on Jan 10th 2014.  
  • Do not close any of your existing accounts especially those with more than 3 years credit history.  If you are unhappy with the credit vendor - wait until your financing is done, then close the account.  
  • Do provide us with the contact information of your preferred insurance agent to obtain property insurance quote.
  • Do pay all your bills on time. Lenders will re-pull credit after 60 days.
  • Do provide your bankruptcy-discharge papers if it happened within the last couple of years. 
  • Do not quit your job. You may change job within the same field provided that it's at least a lateral move.
  • Part-time employment - You must have been steadily and continuously employed for the last 2 years. Declining income is not allowable. 
  • Do provide us with a copy of the divorce decree if you are receiving income from alimony or child support. 
  • Self-employed - Do talk to us first before you even started. Self-employed borrowers require special attention.
  • Do provide 2 most current month bank statements, investment records or retirement accounts that make up a large part of your financial picture. 
  • Do keep the funds in the bank untouched until after closing. The bank wants to ensure that you have enough verifiable funds to close and unexpected expenses after you close on the house. 
  • Do provide bank transaction activity (bank statement) to show bank balances before and after the earnest money check has cleared the account . 
  • Do not make any large deposits (defined as more than 50% of the total monthly qualifying income for the loan) other than payroll checks without paper trail. By that I mean, I need to see a copy of the check and where does it come from. The reason is I do not want to see a new liability created from the cash infusion. Gift funds are acceptable but consult with me first for proper procedures of doing it.
  • Do make cash deposits ahead of time by at least 2 months to be counted. 

If your buying time horizon is not immediate - please read more here to improve your chance for approval. 
Posted by Sam Kader on August 28th, 2011 12:39 PM



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