Helpful do’s and don’ts

Buying a home? Head off problems with these helpful tips

If you’re in the market for a new home, you’ll have fewer problems and delays qualifying for your loan if you follow this inside advice from Sentinel Federal Credit Union.

Clean up your credit. Before you apply, order a copy your credit report and FICO score. There are several online sources available, and for just a few dollars, you’ll learn exactly what information will be used to determine how much money you qualify for and, most important, what negative information appears that will affect your application and interest rate.

For example, if you have had several late payments, start 6 months prior to applying for your mortgage and make payments on time, every time. That may improve your credit score and the interest you’ll pay on your loan. Plus, you’ll have enough time to contact the Credit Bureaus in writing to explain or correct any outright wrong information. Looking at your credit report on a regular basis is also a good way to spot any instances of identity theft. It’s all about you, so be aware of what’s being recorded.

Collect your records. Start now to get the required documentation in order. Create a file – even a shoebox will do – and start saving important papers that your Loan Officer will need at time of application, throughout the loan process, and prior to closing.

Here are some helpful DO’s and DON’T’s to prepare for the application and speed the approval …

DO keep originals of all pay-stubs, bank statements and other important financial documentation. Your lender is required to update any documents that are over 30 days old prior to the closing of your mortgage loan. (This is required even if your loan is approved.)

DO have a copy of your employment history for the past two years, including contact information.

DO have your residence history for the past two years available, such as your rental agreements or your mortgage account number.

DO have a copy of your Social Security Card.

DO have a copy of your divorce decree, if applicable.

DO have copies of your Federal Income Taxes for the past two years.

DO provide all documentation for the sale of your current home. (e.g.: sales contract, closing statement, employer relocation/buyout program).

DO notify your Loan Officer if you plan to receive gift funds for closing costs.

DO notify your Loan Officer of any employment changes. (e.g.: change of employer, recent raise/promotion, transfer, change of pay status, such as salary to commission scale, etc.)

DO NOT change jobs/employer without inquiring about the impact this change would have on the approval of your mortgage loan.

DO NOT make major purchases during or prior to closing (e.g.: new car, furniture, appliances, electronics) as this may impact your qualification ratios. Please confer with your Loan Officer to have him/her calculate what your ratios would be with any additional debts.

DO NOT obtain and/or deposit unusually large sums of money without notifying your Loan Officer. FNMA/HUD guidelines require documentation as to the source of these funds (e.g.: copy of bonus check, copy of tax refund, copy of insurance settlement, gift letter with copy of check and deposit slips, etc.)

DO NOT close/open or transfer any asset accounts without inquiring about the proper documentation required for your loan file. (i.e.: If you transfer all the funds in your stock account to your savings account, documentation is required.)

DO NOT open or increase any liabilities, including credit cards, signature loans, etc., during the loan process. Please check with your Loan Officer for any documentation that will be required and what impact this would have on your qualification ratios.

For most people, this is just a matter of organizing documents they already have on hand and using common sense. Taking a little time to get your papers in order for the Loan Officer will make the application easy and the approval process swift. A little time spent now means a lot of time – and even money – saved later, so follow these tips to take the headache out of home ownership.

Send us a message to request your free consultation or call us today at 605-923-1405 or toll-free at 888-923-1400 and learn how Sentinel Federal Credit Union can help you get financially fit.