If you are wanting to buy a home whether this is your first home or your last home, times have changed. Qualifications, guidelines, loan processes have dramatically changed. Honestly we get new guideline changes everyday! The best way to prepare you for purchasing a home or even refinancing your current home is for us to communicate with you that being prepared, organized and disciplined is essential!!
What I mean by getting prepared is start getting your finances in order at LEAST 3 months prior to when you want to purchase. Start paying down debts, putting money aside for a down payment, pull your free credit report and see if there are any discrepancies that need to be addressed. Then start researching quality lenders, meet them, sit with them, discuss your goals. A good lender should be your guide all the way through prior to even meeting a Realtor.
In part of getting your finances in order, one important tip I could give and would help simplify your process is to organize by starting a checking/savings account that is strictly for your home purchase. Do this at LEAST 3 months prior to when you plan on applying to purchase a home. This would be an account you will use to pay your mortgage and only your mortgage. Put your down payment funds in this account and DO NOT deposit cash, or other un-sourced deposits. If you do, this will cause more paperwork in the process, so avoid if at all possible. The best option would be to get your payroll to direct deposit to this account, then transfer funds OUT (not in) to your other account(s) for other bills and personal spending. What this does is prevents you from having to get documentation for large deposits (checks, explanations…) or multiple transfers in, from other accounts (more statements). You will also have a steady flow of money coming into this account, that is easy to document. When it comes time to get pre-approved you will be asked to supply two (2) months of bank statements. And now you will see you should be able to use only this account, which at that time you should have enough money to show available funds for closing. This will make your life much easier, trust me!
Yes, this takes DISCIPLINE! I am sure that this may sound confusing right now, but trust me you will thank me later. If you don’t take this approach, then like most of us, getting your paperwork together for your lender will seem a little excessive. For example, if you have two banking accounts that you do most of your financing with (like most of us). Maybe one account gets your payroll and you pay “x” amount of bills out of it. Then the other account you transfer funds to and from to pay other bills or transfer $ to savings. If you keep doing this then when it comes time to qualify your will be asked to provide two (2) months statements from BOTH accounts. And if you have any large deposits, which $200 could be considered a large deposit, and it didn’t come from your payroll, you will need to document EVERY large deposit. Getting copies of checks, cash deposit slips, etc. And providing a letter of explanation for what each deposit was. CRAZY, I know, but necessary!
Now remember this isn’t for everyone, BUT for the majority of you it may make sense when you use multiple bank accounts, transfer money between them, or even your significant other or parents as well.
Here is a great article from Forbes I highly recommend reading:
This is a lot of information and may be a little (or a lot) confusing. Please call or email me if you have questions. If you are ready and want to start the process of getting proapproval, please click here to complete a secure online loan application.
Cheers~
Ray Williams
Branch Manager
Summit Home Mortgage
303-779-0591 ext. 101
