Buying a new home is an exciting time.
When you do it the right way, you will be able to get good rates and have an affordable payment while you work hard to make the house your own.
While finding a loan can be a big challenge, there are also some other tips that you need to follow to make sure the financing of the home does not fall through.
Once you find a lender and a house, there are things that you can do to help the process along and make sure that it all goes well.
Failure to follow these steps could result in you losing the loan and your dream home.
Some of the best tips you can follow to finance a home loan include:
Avoid Opening New Lines of Credit
Once you get a pre-qualification for a home loan, you should just leave your credit alone as much as possible.
This is not the time to take out new loans, new credit cards, or anything else that is going to utilize your credit score at all.
Doing this could impact your debt to income ratio and your credit score, which can ruin your chances to get the loan.
When you increase or open a new credit account, whether it is a credit card, loan, or you finance a car, it can have a very large impact on your approval for a mortgage.
This is not the time to finance that new furniture or get a new car while you wait for the mortgage to clear and for you to get your new home.
Do Not Deposit Lots of Cash
You have to be careful about any large deposits of cash that are put into your account between the application for the mortgage and when it closes.
This may seem like a good thing because it provides you with more money to handle the closing costs and down payment, but this can actually harm your chances to get the loan.
When you deposit or obtain an unusually large sum of money during this time, the underwriting team is going to send up red flags.
If you do get a gift from someone, a big bonus at work, or an insurance settlement, you will need to provide a good deal of documentation to prove where the deposit source came from.
Continue to Make Debt Payment on Time
If you are not in any debt, then you need to work hard to avoid getting into debt in the future.
If you do have any debt, that does not mean you are out of luck for a mortgage.
But work to pay down the debts and make all of the payments on time.
It is important that all of your bills get paid during the application process.
One late bill can ruin your chances of getting the mortgage and moving into the home.
You will find that your payment history is going to be a huge factor for your credit score, and your lender will monitor the credit throughout the whole approval process.
For those who have a big change in their credit score, there could be problems in getting the home loan financing that you need.
This is especially true if you have a large decrease in the credit score.
Timely payments can help keep the credit score doing well and will provide you with the home financing that you need.
Submit All of the Items Requested
As you go through the loan process, you will find there is a lot of paperwork.
There are many times the data is sent to underwriting and you will be asked for more documentation to prove something or to show that you are a good candidate to get the mortgage.
This will get tiring by the end, but it is done to ensure any problems are caught early and you can get the home loan.
During this process, the mortgage lender will collect and then verify all of the documents that are necessary to help prepare your file for review.
This documentation needs to be handed in as soon as possible.
Most lenders know that their clients have jobs and can’t respond immediately, but it is best to do this within three days at most.
Waiting too long is going to cause delays in the mortgage process and will make it hard to get the loan closed on time, especially if you are on a tight deadline to start to start with.
As soon as you have some free time after the items are requested, sit down and get them all in to speed up the process and make it easier.
Let the Lender Know of Changes
Some mortgage processes can be quick and others are going to take a few months or more. It will depend on the market and how long it takes for both parties to agree and get it all done.
While that isn’t super long in the grand scheme of things, it can be long enough for major changes to happen.
Whether the changes will be your marital status, your overall financial picture, or even your employment, you need to let the loan officer know about these.
They will be able to sit down with you to look over your information and see whether it is going to make a big impact on your mortgage or not.
Some of these changes will not make a big difference and you can still proceed with the loan.
Others will be a bigger deal and you may need to re-assess whether you can get a mortgage or not or if you need to look at a different mortgage program.
Financing Your Home Loan
A home loan can take some time and there are days when you may feel frustrated and like it is too much work.
With the help of some of the tips above, you will be able to keep your finances in order and help you get the home loan that you need.