Purchasing a home has never been more affordable, but purchasing a home may have never been more demanding.
The basic qualification requirements though have not really changed. You, as a home buyer, must document your credit, your income, and your assets.
The key for a smooth and on time closing is for you, the home buyer, to provide the documentation needed as quickly as possible, but also to know before you make application what your documentation should show.
In today's market most real estate agents and sellers require that your contract offer to purchase be accompanied with a lender preapproval letter.
It is difficult to fix any shortcomings in the three major qualification areas of credit, income, and assets, during the 30 to 60 day time frame allowed with most purchase contracts.
Best advice is to be qualified before you begin your home search.
Everyone understands credit and income. Everyone knows now that most lenders and programs have minimum credit score requirements. Everyone knows that stated income programs are no longer available. Your income must be documented and be sufficient to qualify for the new payment and existing obligations.
Assets though are not so well understood by everyone. Just having the money is not always enough.
All programs have allowed sources for funds to close. In today's lending environment many lenders are checking asset documentation closely to see that the funds to close exactly meet loan program guidelines.
All documents must show the beginning balance, ending balance, your name, the bank name, and all transactions. Basically you should provide full statements and all pages. Even that last page that is blank. If the statement indicates 1 of 5 pages, the lender will need all five pages!
Home buyers should be prepared to show 2 full months of asset documentation for all funds to be used for closing. Lenders may ask to have any unusual deposits explained or documented.
They are verifying that funds needed for closing come from borrower income or accumulated savings or other acceptable sources. It is best to avoid making any unusual deposits for the two months preceding making loan application, because the requirement to explain or document those deposits cannot be avoided.
Cash deposits are especially difficult.
Even after providing the bank statements for your application, take care to avoid unusual deposits until the updated statements are approved. You may need to update your asset documentation to show the earnest money check and the appraisal payment clearing your account.
Asset documentation is becoming more and more critical for your home purchase loan approval. It can be a cause for a delayed closing or a cause for annoying and unnecessary last minute documentation request.
Basic documentation for a quick and reliable pre approval.
One month's worth of paystubs
Last two years W2's and full tax returns, all pages
Two months full and complete statements for all asset accounts to be used
Any documentation for a bankruptcy or divorce
Driver's license and other identification (Social Security card)
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Conventional, FHA, FHA 203k, HUD $100 down purchases, VA,
Rural Development ( USDA), and Jumbo Loans
Sierra Pacific Mortgage
Cell phone: 423-280-0345 Email: Richard.Smith@SPM1.com
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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Sierra Pacific Mortgage.