Without the help of a seasoned mortgage advisor, obtaining a mortgage can feel like a marathon race that involves far more paperwork, background checking, and phone calls than you could have ever imagined. The mortgage process can be a balancing act that consists of making wise financial decisions without tipping the scales towards creating an unfavorable mortgage profile. Stay on track with these mortgage dos and don’ts.
DO start gathering paperwork now.
Make sure that you have access to paystubs, tax returns, W-2s, and 1099s for at least two years. This all comes together to paint a clear portrait of your financial situation so that wise decisions can be made about your ability to take on a mortgage.
DON’T open new lines of credit.
It can be very tempting to take out new lines of credit, whether you need it to furnish your home or you’d like to have one on hand for emergencies. A major factor in deciding your eligibility for a mortgage is your debt-to-income ratio, or DTI. Another line of credit could push you over the limit. Additionally, each hard credit inquiry puts you at risk for falling below mandated score requirements.
DO inform your mortgage advisor of gift funds.
We all need a little hand up sometimes, and an altruistic relation may decide they’d like to help you get the ball rolling on your new home by paying your down payment. While this is allowed, be aware that any gift funds must be documented through analysis of the giver’s bank account. Just as you’re required to provide documentation of your accounts, the gifter will be required to provide the same.
DON’T make any deposits that aren’t payroll or regular income.
This could be a sign to lenders that you’ve taken out a personal loan in order to pay your down payment and closing costs without disclosing it as a new line of credit. Instead, provide documentation for all accounts that you have and leave money where it is. Even a transfer from savings to checking can look suspicious.
DO contact Homewise Mortgage for all your lending needs.
We want to be your lenders for life. Homewise Mortgage is passionate about helping our clients become homeowners, whether it’s a newlywed’s first purchase or a retiree’s vacation cabin, it’s our honor to serve Minnesota for over 25 years.
DON’T hesitate to give us a call.
Let’s get started financing the home of your dreams!