Quick Mortgage Guide

Whether you are buying a castle or refinancing a condo, here are some easy actions you can take early on to simplify the mortgage process.

1. Try to avoid applying for additional new credit.

Applying for new credit (such as credit cards, auto or student loans, etc.) can negatively impact your credit score. Any changes to your credit score may hurt your ability to qualify for a mortgage. Additionally, lenders will require an overabundance of documentation to determine the effect of any new credit on your ability to pay the new mortgage.

2. Try to avoid increasing your debts.

Qualifying for a mortgage can often depend on your debt-to-income ratio, which can be negatively affected by high credit card balances and line of credit balance increases. Keep in mind that the lender will monitor the ratio throughout the mortgage application process, so try to save that splashy purchase for after closing.

3. Avoid closing old credit accounts.

Did you know that your credit score takes into account the total amount of credit you have available? Closing an unused or old credit account may seem like a good idea, but you can negatively impact your credit score by reducing the total amount of available credit when compared to your total debt.

4. Track any large or unusual deposits and withdrawals from your bank account.

You are required to provide at least two months’ worth of bank statements to the lender in order to qualify for a mortgage. The lender will ask for extra documentation for any large or unusual deposits and withdrawals from that account. Keeping track of those deposits and withdrawals, such as making copies of checks and deposit slips, will make it easier to explain those large or unusual deposits and withdrawals. Additionally, depositing or withdrawing those large or unusual transactions separately from smaller, regular transactions will make it easier for the lender or mortgage professional to track those transactions.

5. Avoid changing jobs during the mortgage process.

Changing jobs before or during the mortgage process will cause a delay. The lender will require at least one regular pay stub from your new job, which may not be available until weeks after you start that job. This delay can put other aspects of the mortgage qualification in jeopardy.

6. Keep track of non-employment income.

Documenting your receipt of alimony, child support, or other non-employment income is an important part of simplifying the mortgage process. Lenders will require full documentation of all income used for qualification. Keep copies of checks and bank statements. Additionally, the prompt deposit of alimony or support payments is important to help show a steady history. Finally, making income deposits separate from other transactions at the bank will help the lender calculate the correct amount.

7. Keep your income and asset documents handy.

In preparation for a mortgage application, it is important to keep track of all the documentation required by a lender. Keeping copies of your pay stubs, W-2’s, Federal Tax Returns, and bank statements will make gathering documentation quicker and easier when you decide to apply for a mortgage.