Applying for a mortgage is a big deal. There’s a lot of paperwork involved. And it must be filled out carefully and completely to ensure that the process goes smoothly. Here are five good reminders before you get started.
1. Fill in the mortgage application (Form 1003) completely.
Many borrowers mistakenly give partial answers and omit information. This can lead a loan officer to make incorrect assumptions. For example, say you’ve worked for 4 years for Company X. You state this information on your application. But Company X underwent a name change this past year, and was originally called Company Z when you started working there. This fact should be clarified when filling out your paperwork, or it could cause a hiccup.
2. Tell your loan officer of any past credit problems up front.
Problems such as tax liens or other financial events are likely to be uncovered during the loan process reports. If they aren’t disclosed up front, the lender may think that you are trying to hide something.
3. Gather your most recent statements.
Gather your most recent tax returns (past two years), and three months of bank and investment (401k + IRA) statements. Remember to provide all pages, even the last pages that may be blank. At the bottom of a bank statement it might say: “1 of 6,” and often the last page can be left intentionally blank. But that last page is actually important because without it, the lender may suspect missing information. Also remember to copy both the front and back of statements.
4. Document any large deposits to your bank accounts.
If a deposit is greater than your typical paycheck an underwriter may require some additional documentation. For example, you may have sold a car, and if so, you’ll need to provide a signed bill of sale, corresponding copy of the title and proceeds check (to prove the money was not borrowed).
5. Avoid buying high ticket items prior to or during a home purchase.
Such purchases, especially on credit, may change a borrower’s ability to obtain a home mortgage because their debt-to-income ratio may change as a result.
– Bob Waun, Bankers Home Loan