If you are preparing to purchase or refinance a house, don’t let these items jump up and scare you. Good preparation makes for a better mortgage experience. Here, Mark Wells of Preferred Financial Services tells you how to start your mortgage process on the right foot.
Why do they need to know so many things for me to get a mortgage?
Think of it this way: if you were going to hand someone a check for $150,000 and hoped they would pay you back, you would probably want to know a great deal about them. The mortgage lender is essentially handing you a check with which to buy a house. They want to know you have the ability and the willingness to pay them back.
How can I avoid surprises in my mortgage process?
Just as in court, tell the truth, the whole truth, and nothing but the truth. Mortgage brokers can’t help their client if they get ambushed by information they were not aware of before starting the application. Once a loan file is compromised, it is very difficult to obtain a loan approval.
What issues cause the most trouble in a mortgage underwriting?
With regard to income, the proverbial “snake in the grass” is any irregularity in the amount you are paid. For W-2 employees, your qualifying income is based on your gross pay. If your pay stubs show variations in pay, a full explanation will be necessary. For any “irregular” income (overtime, bonus, commission, per diem, mileage, auto allowance, etc.) the universal underwriting guideline says that you can only use the irregular income if you have been on the same job for two full years, and then you must average the two years’ amounts received.
What about down-payment issues?
Here, the word is “Show me the money.” All lending programs require the source of the down-payment funds to be traced and shown to have come from acceptable sources. Some programs allow gifts and some do not. But no program allows cash as an acceptable source for a down payment, since its source cannot be traced. The best way to enter into a mortgage application is with your last two bank
statements showing enough funds for down payment already in the account. If you don’t have this, be prepared to source ALL deposits into those accounts for the last 60 days.
Any final warnings?
Yes, there are some things that are very good at hiding, and can kill a loan at the last minute. These include past judgments (that may not show up on your credit report), past government debt (like student loans) you may have defaulted on, and money you owe the IRS. These items can show up in the final title search of public records and cannot be left unpaid. Title work is one of the final steps in the mortgage process, so head these goblins off at the pass by letting your mortgage broker know up front if you are dealing with any of these issues.
Mark is available to answer questions and is happy to help you prepare for your mortgage process. He can be reached at 864-235-9596 or via email at Mark@TheGreatestRates.com.
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